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IRA contributions

on Tuesday, 12 March 2019. Posted in Opinions

Are you putting off contributing to your IRA? You may want to think twice, because when it comes to your retirement account, contributing “early” may be better in more ways than one.

For starters, the earlier you begin contributing to your IRA, the better. And if you’ve already started, it’s important to keep investing on a regular basis. Skipping an annual contribution to your IRA, or delaying contributions all together, can make a big difference to your overall retirement funds. For example, if an investor made annual investments of $5,000, earning an 8 percent rate of return compounded annually, contributions from the age of 30 to 65 would grow to $935,511. Based upon the same investment and rate of return, contributions from the age of 31 to 65 would total only $861,584. If the investor waited five or ten years more, the results would be even more drastic. This hypothetical illustration does not reflect actual performance of any particular investment.

Also important, but often overlooked, are the benefits of making annual IRA contributions prior to the April 15 deadline. Instead of making contributions at tax time, investors may consider making their contributions earlier in the tax year. By contributing earlier, your IRA may grow even faster, due to compounding.

Above all, investors shouldn’t be discouraged if they have waited to contribute to their retirement funds. Your investment professional can help you with a retirement plan to help you meet your personal needs, regardless of your age.

Article provided by Stephen Jones, CFP®, a Senior Vice President/ Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, who can be contacted in the Florence office at (843) 679-4089.

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