Here are several important tips savvy businesswomen should know that will boost their IRAs
Retirement may not be the first thing on your mind as a businesswoman. When you are striving to meet sales goals and grow your enterprise, it may feel like you never want to retire. However, perceptive financiers know that retirement should be thought of quite seriously, especially if your personal finances are involved in business takes. It’s difficult to predict what might happen to your business in the future, no matter how well it might be doing right now. Entrepreneurs, more than anyone else, need the safety that an Individual Retirement Account (IRA) provides. You may already have an IRA or you might be thinking about getting one. In any case, here are several important tips savvy businesswomen should know that will boost their IRAs:
Must-Know Retirement Savings Tips for Businesswomen Click To Tweet
Start Your IRA as Early As Possible
Still in your twenties? That’s no excuse to not to start saving for retirement. Compounding effect shows that the longer you save, the more savings you will end up with. Business owners don’t get the advantage of having their 401(k) contributions matched by the company. Still, retirement should be planned as early as possible to get the best advantage of the compounding effect. Savings can be significant even at a conservative annual return rate of just 8 percent.
A Traditional IRA will Help You Pay Less in Taxes
Roth IRAs are preferred by many entrepreneurs because they help account holders diversify assets. However, a traditional IRA is more advantageous because businesswomen can claim more tax deductibles and pay fewer taxes overall. Sure, Roth IRAs allow account holders to “lock in” to a certain tax rate and pay no taxes when you retire. However, you are expected to be in a higher tax bracket when it’s time for you to retire. Also, the post-tax nature of Roth IRAs is subject to many conditions. However, with a traditional IRA, your retirement contributions could be almost all tax deductible under certain circumstances depending on your Modified Adjusted Gross Income (MAGI). When you withdraw funds as a retiree, you will be in a lower tax bracket anyway. So you will save more money on the long haul with a traditional IRA.
Benefit from Self-Directed IRAs
Prefer to have more control over how your savings are invested? Then a self-directed IRA is the best option. You may need to have made a certain amount of contributions to convert your regular IRA into a self-directed one. Also, you will need to appoint a trustee for your account. The advantage of a self-directed IRA is that you can diversify your investment into a number of sectors. Self-directed IRAs offer different investment options like gold IRAs. You can invest in real estate, stock, precious metals, and any other number of so-called “alternative investments.” When you are saving for the long-term, diversification is crucial. Having precious metals in your self-directed IRA can significantly lower the vulnerability level of your cash assets.
It’s recommended to make small and regular payments to your IRA throughout the year to benefit the most. Even if you can’t make a contribution, you still have time until the end of the tax year. Heed the above advice and pay serious attention to how financially secure you want to be when you retire.