How to Save for Retirement

Roth IRA; Here the contributions made in your account are not deductible,so the statement is funded with post-tax money. That means there are no upfront tax breaks as compared to report of traditional IRA type. The main advantage of this type of account is after the retirement because then the money taken out of this account is tax-free. Both types of accounts are beneficial in different ways and selection between these two depends on your situation; whether you decide to be benefitted now or after retirement. However, most people think that Roth IRA account has the upper hand because tax rates are low right now, so it is easy to pay taxes today rather than after retirement at the time, when money is taken out and when the tax rates will be high as per your expectations. Although there are some people, who predict that tax rates will be lower as compared to existing slabs and they prefer the traditional IRA account over Roth IRA account, of course, you can contribute to both types of accounts if you like to maintain the right balance of their tax obligations.

How much you need to save; This is a natural question for a person who is planning for his retirement,and the most straightforward answer is as much as to meet your retirement expenses. The generalized recommendations of most experts say that you should aim to save at least 10% to 15% of your pretax income.However, some retirement calculators are also available online where you have to fill your current age, pretax income and current savings and the calculator will tell you how much monthly income you will have in retirement based on your current savings as well as how much more you will need to save up to the time of departure.

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