Individual Retirement Accounts – Who Needs to Invest in an Individual Retirement Account?

Every time the economy takes a sharp nose dive, you will hear economists talking about how this affects individual retirement accounts. It is important to remember that individual retirement accounts are much different than the 401(k) retirement program that you have at work. For the most part, an IRA is something that you set up and contribute to on your own. A 401(k) retirement account is something that your employer administers and both you and your employer make contributions to. Just because you have a 401(k) at work does not mean that you should not consider an IRA as well. There are several good reasons why you should consider teaming up your own retirement account with the retirement program you have at work.

The first reason for considering your own account is that only you can discontinue your participation in individual retirement accounts. Your employer can terminate your employment and give you a certain amount of time to roll your 401(k) over or you can just leave your money in the old account where there will be no further contributions made by anyone. Individual retirement accounts can follow you from job to job without ever losing a step. As long as you keep putting money into your own retirement account, you will see your retirement savings continue to grow. That may not be an option with a 401(k) if your employment is terminated.

Another good reason to consider individual retirement accounts is because you honestly have limited choices and control over your 401(k) at work. The choices you are given for your 401(k) are the range of options that your employer has chosen for you. It is entirely possible that you could look at your 401(k) investment options and not find anything you like at all. When you start looking at individual retirement accounts, you can choose any account you want and make any investment decisions that you see fit. When you are dealing with your own retirement account, you are the one that makes all of the decisions.

Individual retirement accounts also offer you a great place to put money that will help you add to your retirement savings. Your 401(k) account can be limited to a certain percentage of your income. Once you decide to maximize your 401(k) contributions, you have nowhere to go. With individual retirement accounts, you have another place to save for your retirement and another way to provide for your future.

About Richard Wilson