Don't let these 5 concerns keep you from investing in an IRA

If you're already contributing to your workplace retirement plan, you're off to a great start. In addition to your employer's plan, there are other ways to save for your future, and a traditional or a Roth IRA may help you in ways that brokerage and savings accounts can't. Contributing to an IRA may have short- and long-term tax benefits and allow you to take advantage of potential compound growth over time.

Despite the benefits, some people still are hesitant when it comes to opening and funding an IRA. Here are five of the most common concerns we hear.

It’s hard to save, especially when you’re balancing it with other priorities, like paying your mortgage or managing your debt. But even small contributions now can add up to big things later on. Would you sacrifice $50 a month now for potentially having $88,000 when you retire? You can start an IRA through TIAA with no minimum deposit. IRAs are flexible: If you don’t want to make monthly contributions, you can make a lump-sum contribution from a tax refund or a pay bonus. 

Save a little now for potentially a lot in retirement

Even $50 a month can have a big impact on your future.

Account value and value at retirement chart

Note: This illustration is intended to show a hypothetical example of the principle of compounding and is not intended to predict or project performance results. It does not include the impact of any investment fees, expenses or taxes that could be associated with an actual investment. If such costs had been taken into account, the results shown would have been different. It assumes a $50 monthly contribution between the ages of 30 and 64 with a 7% annual rate of return and no withdrawals.

Shorter-term goals are great to have, but they shouldn’t prevent you from saving for retirement. You have other options for short-term goals, like low-interest student loans for education, a mortgage for buying a home, or a home equity line of credit for a home renovation. Those types of options don’t exist to help you with paying for your retirement.

Take another look at your budget and see how you can adjust it to let you add an IRA contribution. Remember, a little may go a long way over time!

Even if you have 40 years until retirement, contributing to an IRA now gives you a head start that can have an incredible impact down the road. For example, a 35-year-old who tucks away a $2,000 tax refund in their IRA annually for the next 10 years could end up with $56,000 more at retirement than a person who saves the same amount for the same number of years but doesn’t start until age 45.

That's the impact compounding can have on your retirement savings. Not to mention the earlier you contribute, the earlier you may be able to take advantage of tax benefits, depending on your income level.

You may earn more by saving sooner

Earlier IRA contributions have more time to grow from compound interest.

Value at retirement savings per year at ages 35 to 55

Note: This illustration is intended to show a hypothetical example of the principle of compounding. It is not intended to predict or project performance results. It does not  include the impact of any investment fees, expenses or taxes that could be associated with an actual investment. If such costs had been taken into account, the results shown would have been different. It assumes a $2,000 annual contribution between the ages of 35 and 45, or between the ages of 45 and 55, with a 7% annual rate of return and no withdrawals.

We understand—between the tax considerations, different types of IRAs and rules about withdrawing your money, it can feel overwhelming. We can help you understand a few of the key differences between Roth and traditional IRAs.Still not sure how they would work based on your situation? Answer four simple questions on our IRA selector tool to help decide which type of IRA might suit you best.

That's great—it shows a dedication to saving! However, if you're not checking those old retirement savings accounts regularly, you may not have a good understanding of how you're progressing toward your savings goals. Consolidating those old accounts takes a matter of minutes, and with more of your investments in one place, you can easily track your progress toward your goals and see if your investments match your risk tolerance.1

Now is a great time to take the next step on your path to retirement. After all, 91% of people who have an IRA feel confident about their retirement savings, compared to 64% of those who don't contribute to one.2 If you have other concerns about IRAs, our consultants can help answer any questions you may have.

Get started

Have questions about IRAs?

TIAA consultants can help.

Weekdays, 8 a.m. – 7 p.m. (ET)

Ready to open a TIAA IRA?

Please note that investments pose risks and you can lose money.

1 Prior to rolling over your assets to your current employer’s plan, consider your other options. You may also be able to leave money in your old retirement savings accounts, withdraw cash or roll over the assets to an IRA. Compare the differences in investment options, services, fees and expenses, withdrawal options, required minimum distributions, other plan features, and tax treatment. Speak with a TIAA Consultant and your tax advisor regarding your situation. Learn more at http://www.tiaa.org/reviewyouroptionsOpens in a new window .

2 2017 TIAA IRA Survey

1191708