Improving your financial health can be like improving your physical health — sometimes the hardest part is getting started. The reality is that starting to save early in your career, and using the right mix of savings and investment options, can make a big difference in your long-term financial security. One relatively new retirement savings option is myRA, a simple, safe and affordable retirement savings account from the U.S. Department of the Treasury designed to help more workers start saving regularly.
When you get into the habit of saving early, the potential to achieve a secure financial future increases remarkably. The Center for Retirement Security estimates that workers who start saving before age 25 need to set aside only 15 percent of their annual income throughout their careers to accumulate enough for retirement, whereas those who start when they’re 45 need to save at least 44 percent of their annual income going forward to save the same amount.
Unfortunately, many people hesitate to take the first step because they worry about the high costs associated with opening and maintaining an account or they are afraid of losing their savings in stock market ups and downs. MyRA offers several account features that help alleviate those common concerns.
Reasons to Add MyRA to Your Retirement Plan
MyRA makes retirement planning easier and more affordable, allowing you to simplify your long-term savings plan. The account’s features also make it accessible to numerous types of savers who are at different stages of financial planning.
Find Out: How Much Do I Need to Retire?
1. No Fees
MyRA accounts cost nothing to open, have no annual maintenance fees and earn interest safely. You can continue saving with myRA until your account reaches $15,000 or after 30 years have passed since you opened the account. At any time before you reach the limit, if you choose, you can transfer or roll everything you’ve saved into a private-sector retirement savings plan and continue contributing.
Related: How to Roll Over Your 401k
2. No Minimum Requirements
With myRA, you can plan for and save an amount that fits your budget, whether that’s $5, $50 or $200. No minimum amount is required for opening the account, and there are no minimum balance requirements. One of the best ways to save is to add money consistently and automatically from your paycheck, checking account or savings account. If your income or financial needs change, you can easily increase or decrease the amount you’re saving in your myRA account. You can contribute a maximum of $5,500 per year, or, if you’re over age 50, you can contribute $6,500 per year.
3. Not Tied to an Employer
The Bureau of Labor Statistics reports that 34 percent of private-sector workers lack access to an easy way to save for retirement at work, such as a 401k. Many workers face other barriers to saving for retirement independently from their jobs. That’s why myRA is especially helpful for people without access to an employer-sponsored retirement plan.
Even if you’re a freelance worker, a part-time worker or someone who holds multiple jobs, you can still put money in your myRA account. The account stays with you if you change jobs — you can simply continue saving once you’re on the payroll at your new job.
4. Multiple Ways to Add to Savings
You can add to your myRA account from your paycheck via direct deposit or arrange for one-time or automatic transfers from your checking or savings account. You can also direct some or all or your federal tax refund to your myRA account. Your savings are backed by the U.S. Treasury and safely earn interest, so as you build a savings habit, you can watch your money grow.
Your retirement savings can be a critical element of your future financial well-being, whether you want to retire early or wait until you hit your full retirement age as defined by the Social Security Administration. Depending on your retirement age, your Social Security benefits might not be enough to cover all of your monthly expenses once you retire. Having savings or a form of income other than Social Security is necessary for most people to live comfortably after retiring.
5. Penalty-Free Withdrawals and Other Benefits
Because myRA is subject to Roth IRA guidelines, savers also enjoy some tax advantages. In the event of an emergency or other need, you can withdraw the money you put into the account at any time without paying taxes or penalties on the withdrawal. Here’s how it works: Because you put money in your myRA after taxes, the money will not be taxed again when it is taken out. Depending on your income, you might also be eligible for the saver’s tax credit.
MyRA can prepare you to be more financially stable in retirement. Learn more about myRA at myRA.gov.
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