Individual retirement accounts (IRAs) continue to be one of the most powerful ways to accumulate funds for a financially secure retirement, for several reasons:

• IRAs are convenient ways to save money.
• IRAs are available to everyone with wages.
• Earnings within IRAs are not subject to current taxation.
• Contributions may be deductible in some cases.
• Additional contributions may be made by those ages 50 and above.
• With self-directed IRAs, there is investment flexibility.
• There is flexibility when you begin taking money out of IRAs, especially with Roth IRAs.

The keys to maximizing the ultimate value of your IRA are simple – contribute as much as you can, contribute as early as you can and earn as much as you can. Here are four ways to put those keys to work:

Make Contributions

Everyone with earned income (wages) is eligible to contribute up to $7,000 to an IRA for 2024. In addition, if you are age 50 or over, you can contribute an extra $1,000 for 2024. You can contribute to a regular IRA regardless of your income. It may be tax-deductible if you are not a participant in a company sponsored plan or if your adjusted income is below certain levels as shown below:

Roth IRA contributions are not deductible, but can be made by those with adjusted gross income under certain levels as shown below:

(Consult your tax advisor to determine how these rules may apply to you.)

Take Advantage of the Catch-up Provision

For the past several years, individuals age 50 and above have been eligible to contribute extra amounts to their IRAs. For 2024, those individuals can contribute an extra $1,000 to their IRAs. For someone that turned age 50 in 2024 and that makes an extra $1,000 contribution for 15 years, from 2024 until they retire at age 65, the extra accumulation would be over $25,000, assuming they earned 6% on their funds.

Make Contributions Early

The earlier you make contributions, the earlier your money begins earning on a tax-deferred basis. The latest you can make 2024 contributions is April 15, 2025 (or the extended due date of your tax return). The earliest you can make 2024 contributions is January 1, 2024. By making your contribution early, you are more likely to make an extra contribution over your working career and it adds up. For someone age 30, it can mean an extra $39,880 (assuming an earnings rate of 6%). For a 45-year-old, the extra funds could amount to over $16,000.

Invest Your IRA Wisely

Your IRA is, or will become, a significant part of your net worth. How it is invested deserves the same attention you give your other investments. Be sure to include your IRA in your overall investment planning and apply the same principles of asset allocation, diversification, and risk tolerance. Because the funds in your IRA will remain there for extended periods of time, you should take a long-term approach with how the funds are invested. If you choose a lower risk fixed income approach, consider longer term CDs instead of shorter-term savings accounts or money market funds. If you are considering equity investments, remember these funds will have many years to grow and choose wisely. You will ultimately be responsible for your retirement and the decisions you make on managing your investments are important. Doing your homework and using the services of a qualified professional can make a large difference.