Types of Retirement Accounts

Individual Retirement Accounts (IRAs)

• Personal savings plans that provide tax advantages for people who are saving for retirement. There are two types of IRAs: traditional and Roth.
• Traditional IRAs are tax-deductible, meaning that the money you contribute to them is tax-free, but you will have to pay taxes on the withdrawals you make in retirement. Roth IRAs, on the other hand, are funded with after-tax dollars, and the withdrawals made in retirement are tax-free.

Employer Sponsored Retirement Accounts 

• 401(k) plan is a type of retirement account offered by employers to their employees. They are named after the section of the tax code that governs them. The contributions made to a 401(k) plan are tax-deductible, and the money grows tax-free until it is withdrawn in retirement. Many employers also offer matching contributions, which means they will match a portion of the employee's contributions.
• 403(b) plan is similar to a 401(k) plan, but it is offered to employees of non-profit organizations, such as schools, universities, and charitable organizations. The contributions made to a 403(b) plan are tax-deductible, and the money grows tax-free until it is withdrawn in retirement.

Investing towards your retirement is essential if you want to ensure that you have enough money to cover your expenses in your golden years. It is important to start investing as early as possible to take advantage of the power of compound interest. By investing consistently over a long period, you can accumulate a substantial amount of wealth that will provide a comfortable retirement.

Retirement planning and investing can be challenging, which is why it is essential to seek advice from a financial advisor. At Clay Financial, we offer personalized retirement planning services that are tailored to your unique needs and goals. Contact us today to learn how we can help you achieve financial security in your golden years.