How to Keep Investing in IRAs

Funding an IRA can lower your tax bill.

Investing in an IRA builds your retirement savings while lowering your tax bill. At times it can be hard to find the money to fund your IRA, but making those contributions consistently year after year is the best way to grow your nest egg and ensure you will have enough money to retire. Transferring money automatically from your bank account to your IRA forces you to fund the account and makes putting that money aside a bit easier.

Instructions

1. Examine your monthly budget to see how much money you can afford to put aside each month. Even if you cannot afford to invest the maximum in your IRA, every little bit helps.

2. Look for ways to save extra money and put it toward your IRA. For instance, if you get a bonus, you could put half of that bonus in your IRA. If you get a raise, you could put a percentage of that raise toward your IRA savings.

3. Set up an automatic monthly transfer from your bank account to the mutual fund or brokerage firm where you have your IRA account. Continue to make those monthly transfers until you reach the yearly contribution limit for your IRA.

4. Track your IRA contributions and keep a copy of each purchase confirmation for your records. Tracking your purchases helps ensure you do not contribute more than the maximum allowed by the IRS. For 2011, you can contribute up to $5,000 to an IRA, plus an extra $1,000 if you are 50 or older.

References

• IRS: 2011
• CNN; The IRA Advantage