IRAs beef up retirement savings

There’s no doubt, Americans have a love affair with their 401(k) plans. But with their portfolios battered by the financial meltdown and the specter of rising health care costs looming, many future retirees are realizing that a 401(k) alone may not be enough. In fact, financial experts say tomorrow’s retirees will need 80 to 100 percent of their pre-retirement income just to live comfortably.

With that in mind, investors are supplementing their retirement savings with the Individual Retirement Account (IRA).

There are two primary types of IRAs to choose from. The original, or “traditional” IRA, allows retirement contributions to grow tax-deferred until withdrawn. By contrast, the newer Roth IRA offers tax-free growth. Contributions are made with already-taxed dollars, so there is no deduction for contributions. That means contributions (but not earnings) can be withdrawn tax-free, without penalty at any age.

If you’ve contributed the maximum to your 401(k) and still have money left over for retirement savings, an IRA may be a great place to put it.

For information about AAA’s Deposit Program, including traditional and Roth IRA CDs, visit AAA.com/Deposits or call (888) 728-3230.