Today's Spare Change:- Definition of the Day: Roth IRA
- A Money Myth Worth Disproving
- The Roth IRA is different from the traditional IRA in two ways: It provides tax benefits when you take the money out at retirement rather than when you invest it and it has higher income limits.With Roth IRAs, you cannot deduct the amount of your contribution on your tax return. However, you will not pay taxes when you withdraw your funds. There are no income limits if you are not covered by a pension plan at work. You can withdraw contributions and earnings at age 59½ with no federal tax or penalty, provided you opened your account at least 5 years prior. If you are less than 59½, you can make tax-free and penalty-free withdrawals 5 years after opening your account for certain medical expenses, higher education expenses or to buy your first home
- Money Myth: The majority of women are now part of the paid labor force so they will be better off in retirement than current women retirees.
- Fact:Elderly women are twice as likely to live in poverty as men and experts do not predict much change in the future because:women earn less money than men and have less to save; caregiving responsibilities make women more likely to leave jobs or work part-time and forfeit pension benefits as a result, and women are more likely to work in occupational sectors, such as the service industry, where pension benefits are less common.
To overcome these challenges, women need to: make a retirement savings plan early in life and stick to it; stay at jobs long enough to earn retirement benefits; and seek out jobs with better benefits when possible.
1 comment:
Good call!
Since women are more likely to be employed in low-wage sectors where they do not have the option of joining a employer-sponsored retirement plan, Roth IRAs are a particularly good option for them.
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