This Underused Retirement Account Looks Better Than Ever
There's no substitute for saving if you want a financially secure retirement. Social Security can help you get part of the way there, but you'll need your own nest egg in order to cover unexpected expenses and add spice to your retirement lifestyle.
However, many people focus on the wrong thing when they save for retirement, and part of the blame goes to the federal government. By offering up-front tax breaks for contributions to traditional IRAs and 401(k) plans, the IRS gives people an immediate incentive to favor those types of retirement accounts. As a result, a smaller number of taxpayers pursue Roth IRAs than traditional IRAs. But due largely to the changes in tax rates in the past couple of years, the advantages of Roth IRAs are even clearer for many people.
The biggest advantage that a Roth IRA has over a traditional IRA is that it gives you the ability to save and invest on a tax-free basis. Not only do you not pay taxes on income and gains while the assets remain in the account, but you also typically won't have any tax liability when you make qualified withdrawals from the Roth IRA in retirement.
Source Fool.com
