GCTFCU Blog | Reasons To Open A Roth IRA

Reasons To Open A Roth IRA

Roth IRAs are individual retirement accounts which promise tax-free income on retirement. Roth Individual retirement accounts are the best option for those interested in lower taxes and more retirement savings. Thus, you save after paying your taxes. It is a great form of investment for people of all ages. In addition to the tax advantage, Roth IRA’s allow you to use the money for different purposes other than as a retirement fund without being taxed or charged for the same. You can visit a nearby credit union for more information on Roth IRA’s.

If you are wondering whether a Roth IRA is a good investment option for you, here are some reasons in favor of this investment option:

Easy Withdrawal: The best thing about Roth IRA’s is that there are no restrictions on withdrawing money like in other retirement plans. You are free to withdraw any amount of money at any time for any purpose. This is helpful in case of emergencies when you might need quick cash.
Tax-Free Retirement Income: You are not expected to pay any taxes on the amount saved for decades. That translates into tax-free income in retirement. Credit unions offering Roth IRAs, charge tax only at the time of making the deposit but not at the time of withdrawing the principal amount and earnings. This also protects investors from future income tax raises.
Benefits To Your Heirs: Roth IRA’s are not only beneficial for you, but also for your heirs. The money in your account can be used by your heirs as tax-free income for the rest of their lives. However, the heirs will be subject to minimum distributions depending on their age at the time of the original account holder’s demise.
No RMDS (Required Minimum Distributions): Roth IRA’s do not impose any restriction on making contributions after a certain age (70 ½ years). Investors can keep on adding to their Roth IRA accounts irrespective of how old they get. They are not required to take distributions and pay taxes.
No One-Time Investment Amount Required: With Roth IRA’s there’s no pressure to invest a huge sum of money in one go. Most credit unions these days encourage members to pay steadily and comfortably by setting up automatic deposits. So you are saving without making much effort on your part.

For more information, visit Greater Central Texas Federal Credit Union at 3305 E Elms Road, Killeen, TX 76542 or call at (254) 690 – 2274.

Taking Advantage Of Skip-A-Payment Option

At one point during a loan period, financial institutions usually invite their clients to avail a skip-a-payment option in order to save some money. This is usually once every year provided your mortgage is not in arrears and the current balance of your mortgage plus the payments you desire to skip are not more than the original value of the mortgage. It pays off to know some ways in which such an option can be used to your advantage if you decide to avail it.

Here is a list of some ways in which a skip-a-payment option can be taken advantage of:

Holiday Months Shopping: The money you save on skipping a payment can be used during the holiday season. You can make the most of heavy discounts and sales by creating a buffer budget. With more money in your pocket, it is easier for you to purchase essential decoration items during the holiday season. This works best for those who have not planned their holiday expenses in advance and end up incurring more than they had planned for.
Post-Holiday Expenses: If your financial institution offers you a skip-to-payment option at the beginning of the year, it might be a great chance to pay a part of your holiday expenses that are lingering on in the form of credit card balances. The skip-to-payment option in this case works best for those who have spent in advance for the holidays.
Vacation Expenses: If you are all set for a family vacation but not quite prepared financially for any sudden expenses that might crop up, a skip-to-pay option gives you the much needed financial cushioning during such times. You can always bank upon the extra cash.
Sudden Unexpected Expenses: By deferring your loan payment for a month, you can easily adjust to sudden expenses that may arise due to a medical condition, loss of job, auto or home repairs etc. At least for that trying period, you don’t have to worry about your incoming bills.

Conclusion: A skip-a-payment option is no doubt a very valuable tool when extra finances are required suddenly, it should however be used smartly. You cannot depend on it as a long term solution to your financial insufficiencies. It is advisable to consult a private budget counsellor or an expert in this matter from your financial institution for guidance as to how to make the most of this option.

For more information, visit Greater Central Texas Federal Credit Union at 3305 E Elms Road, Killeen, TX 76542. You can also call at (254) 690 – 2274.

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