Start Your IRA Now

There are several good reasons why a person should have an IRA and why they should start sooner than later.
The best reason is attributed to Albert Einstein who once said; “Compound interest is the eighth wonder of the world. Those that understand it earn it and those that don’t pay it.”

Here is a simple explanation of this concept. Two young ladies, one age 25 and the other age 35. Both decide to start an IRA and put $5,000 a year into the account. The 25-year-old; starts an account and pays $5,000 each year for the next ten years. Then she stops and never puts another penny in the account. At current rates, at age 65 her account value would be $402,697. Keep in mind that she only put in a total of $50,000 and com- pound interest has done the rest of the work. The 35-year-old woman puts $5,000 into her account and puts that amount in every year until she turns age 65. She has put $150,000 in her account and the value at her age of 65 is $267,147. The moral of the story is the sooner the better.

A couple of other points to con- sider: Usually an IRA would be tax- deductible by following the guidelines. This means tax savings for you. Of course, when you withdraw money it will be taxable and an early withdrawal penalty may apply prior to age 591⁄2. Sometimes a person may not be eligible for a traditional IRA because they make too much money and/or they have a pension plan at work. In those cases where they exceed the income limit, make a non-deductible IRA contribution. Also, depending on income a person may be eligible for a Roth IRA contribution which has a much higher income threshold.

Most people believe that there must be earned income to have an IRA. While that is generally true there is one exception and that is for a non-working spouse. This person may be eligible for a spousal IRA if their partner has earned income and meets the guidelines.

The final point to consider is retirement security. Most people when they retire are going to rely on income from Social Security, a company pension plan and personal savings. This latter category might include rental income, savings accounts, 401K money, a second home and IRAs. An IRA is one of these sources that could make the golden years a little more comfortable. An NSS IRA could be turned into a lifetime income stream too. The possibilities are endless so start something now!

Call your local NSS representative or Joe Elliott in the Home Office for more information and see how we can help make your future a little brighter. Also, check with your tax advisor since this is general information. Your particular situation may be different and need expert help.