IRA'S, etc.

[instant_oatmeal]

Can someone break them down real simple for me?

As of right now we aren't doing anything for retirement (dumb I know) and I want to change that. I just don't understand anything with numbers. lol IRA's, any other type of retirement ideas..anything! Thanks!

[instant_oatmeal]

bump

[guynavywife]

An ira is a tax deferred (sometimes tax free) long term investment.
Money gets taken out of the pay check pre tax...meaning it isn't included in the taxable income.
This lowers both the taxable amount, and possibly the tax bracket.
When the money is taken out, after you reach a certain age, or retirement, it is taxed then.
The idea is that in retirement, your overall taxable income will be lower, thereby lowering your tax bracket.
You end up paying less taxes on the money then, rather than more now.

IRA's can be be invested, earning income, which again, is not taxed until retirement, and at a lessor percent.

There is a maximum amount you can invest into an IRA per year.
There are penalties for withdrawing early, except under special circumstances.
There are different kinds of IRA's.inlcuding Roth IRA's.
They have different rules about investing and transferring..