If you are planning to assure a secure retired life you have to start planning sooner. Retirement planning means to save a sum of money and to gain interest on them. For example if you open an account for use only after your retirement, you can rely on the interest of this account to have money for your old age. Generally, these types of accounts are called Individual Retirement Accounts or IRA.
There are many types of IRA. The most important types are traditional IRA and Roth IRA. A main difference between them is the fact that traditional IRA is tax deductible but Roth IRA is not. If you open an ira and make contributions to it, when you decide to withdraw from your account, there are additional charges on account of some penalty. If you open a roth ira, you can withdraw an account of money from it without penalty charges. In traditional IRA, your investment options are few, but there are very many restrictions about it. In Roth IRA you have a lot of investment options.
You can open an IRA at any financial institution, preferably at a bank or a brokerage firm. When you set up an account at a bank, this bank will become the trustee of your account. There are some things that you need to know to recognize a reliable trustee.
A good trustee offers low account fees and very low commission. Also, it offers a plan whose minimum balance is very low. You have to choose a company that has very few restrictions over the type of investments you can take on and where you can make automatic contributions from a linked bank account of yours.
When you find a company that offer a plan with all of the above characters, you can open an account there.
- Knowing the Roth IRA Tax Rules (2011tax.org)