No matter the method selected, saving for retirement is a wise move. Nonetheless, once you've made the decision to save, you'll have many additional steps to take. Even after you have committed to open an IRA, you must first choose which type of IRA. For working Americans, two basic choices exist: a regular IRA or a Roth IRA. At a very high level, the two accounts are mirror-images of one another. Whereas a regular IRA can provide an upfront tax deduction and years of tax-deferred growth before taxes are due on distributions made during retirement, a Roth IRA contribution provides no immediate tax break. On the other hand, a Roth IRA grows tax-free, meaning no taxes are due in retirement.
Not surprisingly, there's even more to it than that. Consequently, Choose a Regular IRA or Roth IRA is the second step in my How to Save for Retirement With an IRA Series.
OK, Soldiers…it’s the Sarge with some Sage advice. Probably the last thing you want to do to clutter up that gray matter inside your kevlar is stress over retirement, which is probably a good 30 to 40 years away. My advise…STRESS! The good side first: you’ve got at least that many years for any investment, large or small, to compound (to grow). Take it upon yourself to educate yourselves on the traditional AND (not vs) Roth flavors of IRAs…they BOTH have viable and logical places within your portfolio.
The important thing to remember is to start ASAP/PDQ. Time, which is the cheapest commodity you own, is ON YOUR SIDE…UTILIZE IT NOW! Not tomorrow, not next month, NOW! I know, easier said then done. Look, I’ve been there…lousy pay, stinkin’ duty hours, and PX/BX prices aren’t really the great deals they once were back in the dark ages. But don’t let all that stuff get in the way of your future. Military training/experience teaches you to overcome obstacles between you and the objective, so just do it.
I’m not going to use this forum as a commercial endorsement media, however, there are credut unions which specialize in the interests of Military personel. Find em, learn all about em, and jump in!
THAT’S AN ORDER FROM THE SARGE…GODSPEED!