Let us break this down
1. You work for yourself, you are a coder, an artist, a dancer, or maybe even a hairstylist
2. You start an IRA portfolio, specifically a Roth IRA
3. Time passes
4. You get older
5. You take money out of your IRA
6. That has grown to become cash bags
7. Pull the money out without paying any TAXES! #takethatunclesam
Now let us piece this together; You freelance as a coder/dancer/artist or whatever you choose to do but you work for yourself #likeaboss. You start thinking about retirement and like a smart Emoji you start an IRA specifically a Roth IRA. Some time passes and you continue to contribute to your IRA and the day comes when you turn 59½. You decide to grab moneybags full of cash out of your portfolio and because it is in a Roth account, it is free from taxes!
Orca strongly believes in investing for your retirement at a young age because of a beautiful concept called compound interest. As you get older, it is wise to have a portfolio set up where you can pull money from, the more money you have put aside the earlier you can possibly retire as well as enjoy your life. The amount varies but some studies have estimated as high as one million dollars needed to retire for the millennial generation. To get a better understanding of your needs, you should meet with one of our partnered advisers here.
401K Roth Versus Roth IRA
• 401K: An employer offers this and you can contribute up to 18,500 a year.
• Roth IRA: Usually created when you work for yourself, and max is $5,500 or at age 50+ $6,500
Two Types of IRA
• Traditional: This is deductible on your tax returns for the current year, and all money that is grown is taxed at ordinary income.
• Roth: Money is grown tax-free, and can be taken out after 5 years without any penalties and can be used towards buying your first house without taxes! But this is not deductible on your tax return.
• The younger the better
• If your employer matches, take the free money
• Understand the types of plans out there
• Tax plan with your IRA accounts in mind
• Take advantage of changes in income for your accounts (reach out here)
Saving for retirement is important, and understanding when you can invest in a Roth versus a traditional is a MAJOR KEY as DJ Kahled would say.