If early retirement if the goal, a ROTH IRA is an attractive option. One reason to invest using a ROTH IRA is that there are no penalties for withdrawing funds early, a bonus if you plan on retiring early and want funds before you hit retirement age. Even better, starting at age 59.5, all distributions are tax-free. ROTH IRAs are also more flexible; funds can be used for children’s college education. With the uncertainty of the stock market, ROTH IRAs are less prone to volatility and therefore more reliable. In conjunction with other investments, a ROTH IRA is a positive addition for early retirees.
- When you incorporate a Roth strategy into your retirement savings plan, you can start to develop a tax-free approach.
- Roth IRAs are naturally free of taxes when it comes to distribution once you turn the age of 59.5.
- It is often harder for those who have higher incomes to contribute to an IRA, but there are still ways around it.
“A Roth IRA is the only tax-favored retirement vehicle in which a saver can access some of the funds without an IRS penalty prior to age 59.5.”