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An IRA Is a Powerful Retirement Planning Tool

The importance of sound financial planning for retirement cannot be overstated. It’s critical because Social Security and pensions may not provide you with enough income to support your lifestyle when you retire.

How much will be enough? As a rule-of-thumb, estimate that when you retire you will need about 70% of what you spend before retirement. That’s a substantial sum, especially when you consider that most of us hope to be retired for 20 years or more.

IRAs Let Your Money Grow Faster

The tax advantages offered by Individual Retirement Accounts, IRAs, can make a big difference in how well prepared you are to finance a comfortable retirement. Your IRA earnings are tax-free or tax-deferred, which means that federal and state taxes are not deducted. With more tax-free income, your money can grow faster. You can contribute to your IRA every year that you earn income, and you choose where it should be invested.

• Traditional IRAs are tax deferred. Contributions and earnings are not taxed until they are withdrawn
• Roth IRAs go one better. Contributions are made with after-tax dollars, but earnings are tax-free: no tax is owed on earnings as they accumulate or when money is withdrawn. Take advantage of the favorable tax laws on Roth IRAs.

IRAs offer greater flexibility and more valuable benefits than in the past. Because investing in an IRA is so important to your financial future, and somewhat complicated, we suggest that you also consult your financial advisor and a tax professional before you make a decision. Detailed information can be found in the IRA Information Booklet.