Page 19 - Explore Your AAA – AAA Southern Pennsylvania – July/August 2019

There’s no doubt, Americans have a
love affair with their 401(k) plans. But with their portfolios battered by the financial meltdown and the specter of rising health care costs looming, many future retirees are realizing that a 401(k) alone may not be enough.
In fact, financial experts say tomorrow’s retirees will need 80 to 100 percent of their pre-retirement income just to live comfortably! With that in mind, more and more investors are supplementing their retirement savings with an old friend — the Individual Retirement Account (IRA).
The good news is that you can contribute to an IRA even if you’re in a retirement
plan at work!
BENEFITS ANY WAY YOU SLICE IT
There are two primary types of IRAs to choose from:
Traditional IRA: The original, or “traditional” IRA, allows retirement contributions to grow tax-deferred until withdrawn (potentially speeding their growth). Currently, you can contribute up to $5,000 a year, or up to $6,000 a year if you’re 50 or older. Eligible
taxpayers can also take a tax deduction on their IRA contributions (eligibility phases out above certain adjusted gross income limits, and being in a retirement plan at work tightens these limits).
Roth IRA: By contrast, the newer Roth IRA offers tax-free growth. Taxes are paid up front — contributions are made with already- taxed dollars, so there is no deduction for contributions. That means contributions (but not earnings) can be withdrawn tax-free, without penalty at any age. That’s why many people use Roth IRAs for both college and retirement saving. Eligibility for contributing to a Roth IRA phases out above certain adjusted gross income limits.
THE BOTTOM LINE
If you’ve contributed the maximum to your 401(k) and still have money left over for retirement savings, an IRA may be a great place to put it.
For information about AAA’s Deposit Program, including traditional and Roth IRA CDs, visit AAA.com/Deposits or call 1-888-728-3230.
MISCONCEPTIONS = MISSED OPPORTUNITIES
Misconception: IRAs are for older people.
The truth is that younger investors often benefit the most because they have time (and the power of compounding interest) on their side.
Misconception: You need thousands of dollars to open an IRA.
Wrong! Getting started without an initial lump sum is as easy as setting up automatic monthly payments.
POINTS
Use your AAA Member Rewards card on every fill-up July 1 thru August 31 and earn 5x points1.
Not a Member Rewards cardholder? Apply today at AAA.com/creditcard.†
AAA members EARN MORE & SAVE MORE at Shell!
SAVE AT LEAST
5¢/GAL.
AAA members save on every fill- up through the end of 2019 when joining the Fuel Rewards® program
at AAA.com/Shell.*
TM
Bonus Points Offer: You will earn 5 points per dollar spent (consisting of 4 bonus points and 1 base point) on Shell transaction(s) that have a transaction date from July 1, 2019 through August 31, 2019. Purchases made through merchants other than Shell will not qualify for bonus points. Merchants are assigned a merchant category code (MCC) and merchant name. We do not determine which MCC or merchant name a merchant chooses to classify itself. Your purchase may not qualify to receive the bonus earn rate if the merchant does not process transactions under the MCC or merchant name that corresponds with the bonus. This promotion will not impact the standard
Revenue Service Form 1099 (or other appropriate form) that reflects the value of such reward. Please consult your tax advisor, as neither Bank of America, nor its affiliates, provide tax advice. This credit card
JULY/AUGUST 2019 19
Finalncial Services