What kind of retirement account should I have?

5 Replies

We need more information - blanket recommendations are dangerous.

IRA means you defer your taxes until you withdraw the money in retirement.

Roth IRA means that you pay taxes now at your current rate, and then withdraw the money tax free in retirement.

Many people recommend that younger people put money into a Roth IRA because chances are that this is the lowest your income will be, so your current tax rate is lower.

I personally use an IRA because my goal is to retire early, and my income in retirement will be lower than my current income.

I agree with @Trevor Day there is a lot of bad information out there about retirement accounts. Typically, the Roth is best for most people. The IRA is usually best for higher income earners trying to lower their current taxes. The self directed IRA or self directed Roth IRA require a good deal of research. You can invest in things such as precious metals, bitcoin, and real estate. There needs to be custodian that allows you to do this, and there is a lot of legality about how money is handled. There are special taxes to be aware of also. If you are considering doing the self directed I would do my research.

Agreed with others, there is a lot of bad information out there. Self Directed IRAs can be either traditional or Roth. Traditional vs Roth has to do with taxes. Traditional, your contributions are tax free but distributions are taxed. Roth is the opposite.

Definitely a decision you should make for yourself, once you understand the differences. Personally I went Roth