When Should You Open An IRA? (Individual Retirement Account)

hey there it's tara with rise up in this

video i want to answer one of the most

common money questions that millennials

ask me all the time

should i open an ira but before we get

started i want to give a quick shout out

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okay so if you're watching this video

it's probably because you have heard

about something called an

ira or maybe a roth ira and you're

wondering if you should open one well

let's start with what an ira is so ira

stands for individual retirement account

and it's a type of investing account

that allows you to save and invest money

for retirement

in a tax advantaged flexible way now one

of the biggest misconceptions is that

you have to choose between an

ira and a 401k you don't you can have

both but when it comes to deciding

whether to open an ira

instead of or in addition to a 401k here

are some points and questions to


first do you have a 401k or 403b at work

if the answer is no then you should

almost certainly open an ira to invest

for retirement on your own

if the answer is yes you may not need to

open an ira for a variety of reasons

let's dig into some of them does your

employer offer a match an employer match

is free money and you should take

advantage of that free money

all day long there are no match

contributions in an ira however so

it might be better for you to contribute

to your company's retirement plan first

at least up to the maximum match allowed

how much do you need to invest for

retirement each year

a 401k allows you to contribute over

three times as much per year than an ira

does currently 19

000 in a 401k or 403b versus a maximum

of just 6 000 in an ira

if you need to save and invest more than

6 grand per year to reach your nest egg

goal then an ira alone won't cut it so

either a 401k or 401k ira combo may be a

better option

if you're getting an early start on

saving for retirement and you don't need

to contribute more than 6k per year then

an ira alone might be suitable

side note if you don't know how much you

need to save or how large of an estate

you'll need to retire then you should

definitely check out one of my courses

money or wealth to figure that out click

the link in the description below for

more information

another scenario to think about you want

to make roth contributions for


some employer retirement plans are only

set up to receive traditional or pre-tax


not roth or post tax contributions if

you think roth contributions are a

better option for your current and

future tax situation

then you may want to open a roth ira in

place of or in addition to your 401k

to take advantage of this tax benefit

you want more flexibility with

investment options now because you can

choose between a variety of ira

providers that offer access to

in some cases practically unlimited

investment options

you get much more control and choice

through most iras than you do through a


choice is especially important when it

comes to the fees that you're being

charged if

your company's 401k or 403b doesn't

offer low cost options

you're probably better off opening an

ira and investing in funds with lower

expense ratios

now another viable reason to open a roth

ira in particular is

to give you some oomph to some of your

longer term savings goals like

a down payment on a house for example

contributions that you make to a roth

ira have already been taxed so

you're allowed to withdraw them without

any penalty at any time

whereas you'll be penalized for taking

money out of a traditional 401k

or ira that means that a roth ira could

offer you a greater return on your money

than you'd get in

say a traditional or high yield savings

account without tying up all that money

until you're 59 and a half

and last but not least you want full

control over and mobility

with your account now because you open

an ira yourself its existence doesn't

depend on

who you work for or where you live it

follows you wherever you go and through

whatever life stage that you're in

that means one last bit of paperwork to

deal with when you switch

jobs all right those are the primary

factors you should consider when

thinking about opening an ira leave a

comment below to let me know if you

think an ira

is or is not the best option for you and

if you want to learn more about

setting yourself up for retirement

success check out our free training

called three money

rules of thumb that you shouldn't

blindly follow you can find the link to

access it in the description

below thanks so much for watching and

subscribing i will see you next time