Everyone's lifestyle, and everyone's retirement, looks different. Maybe you'd like to retire to some sunny locale outside of the United States, or maybe you'd like to move closer to your grandchildren, because family is important to you and you want to be an active part of your grandchildren's lives. Or, perhaps you've always wanted to travel the world during your retirement, never staying in a single place for longer than a few weeks.
Investing is all about benchmarks. To understand the success of a given investing strategy, you need to understand the most common metrics used in analysis and reports. Average returns and actual returns are two of the most common.
What is a Roth IRA?
A Roth IRA is an after-tax qualified account that encourages you to save for retirement by allowing contributions and earnings to grow tax free. As opposed to a traditional IRA that is funded using before-tax dollars, a Roth IRA is funded using earnings that have already been taxed, offering a tax benefit. This also means that your withdrawals in retirement typically will not be taxed – compared to a traditional IRA, whose withdrawals are taxed as income. Once you’re age 59 ½ and have had a Roth IRA account for five years or longer, any money that you take out including earnings will not be taxable.1