Blog : Don’t Overlook an IRA Opportunity

By Craig | Nov 19, 2015 | in

By Mike Bizier

It’s never too early to start planning for your future. It’s a common saying that rings true in the financial world and certainly applies to those planning for retirement. That’s one of the reasons investors and financial advisors alike agree that when planning for your retirement one of the best things you can do is set up an Individual Retirement Account (IRA).

Locally, Mike Smith, a Financial Advisor with the Progressive Asset Management Group’s (PAM Group) Newmarket branch, notes that setting up an IRA account is something people should always consider when it comes to long-term financial and retirement planning. Since their introduction in 1974, the Individual Retirement Account has provided numerous tax advantages to individuals planning for their financial retirement.

If you’re not familiar with the IRA it is a type of investment account that encourages an individual to save for retirement by allowing the assets held in the account to grow tax-free. IRA’s can hold most types of traditional investment vehicles including stocks, mutual funds, bonds, exchange traded funds (ETF’s) and even real estate. In addition, there are many different types IRA’s that are broken down into subgroups providing different advantages available to each subgroup.

And although the IRA program has been in effect for over 40 years, many of the generous advantages of IRA’s are often overlooked. “When it comes to IRA’s, many people don’t realize what opportunities are available,” says Smith.

One of the most commonly overlooked opportunities is making a contribution to an IRA even if you’re enrolled in an employer-sponsored retirement plan such as a 401(k) plan, SEP IRA, or SIMPLE IRA. IRA’s have family benefits, too, can also be overlooked. “If you’re married and earn little income, you may be eligible to contribute to the full annual amount for your IRA based on your spouse’s income,” says Smith.

Additionally, parents can open a Roth IRA account for teenagers, or children in their early twenties, with jobs. Parents put a percentage of their earnings into their children's accounts, helping them to grow over a 50-plus year period.

“With an ever-changing job market and many post-graduate students in debt, a Roth account for your children could help them find financial stability after they graduate,” says Smith.

Roth IRA’s have no maximum contribution age. That means even if you’re ready to retire within a year, and have earned income, you can still build on your Roth IRA account with the added benefit that it can be passed on to your heirs.

“And you should be thinking about contributing to your IRA all year long, not just in the push at tax time,” adds Smith. “If people wait until April it often gets put aside in the hectic rush to complete tax forms and send out payments before the deadline. If a contribution is missed it makes it a lot harder for the account to do its job by taking advantage of that tax-free growth.”

In addition to providing guidance and helping smooth out the process of navigating IRA’s, the PAM Group is also known for helping people interested socially responsible investing (SRI), a type of investing that is mindful of the environment and social justice. Formed in 1987, Progressive Asset Management, Inc. was one of the first brokerage firms to focus on SRI and provides social and environmental screening services to the PAM Group.
According to Smith, sustainable investing is good both financially as well as environmentally. It’s one of the reasons The Pam Group’s Newmarket branch is a Business Partner with the Green Alliance, a Portsmouth-based union of local, sustainable businesses and community members.

Mike Smith can be reached at msmith@fwg.com, or 603.418.8662.

Registered representative offering securities through Financial West Group (FWG), member FINRA/SIPC. The PAM Group is the socially responsible investment division of FWG. Progressive Asset Management, Inc. and FWG are unaffiliated entities.

Green Alliance members receive a free portfolio review as well as a $50 gift certificate to the Green Alliance business of your choice! Not a member? Join here!