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Don't Miss Out: Five Strategies for Getting the Most Out of Your IRA

Author: Malik King

Malik King, Vice President | Retirement Product Manager, J.P. Morgan

Don't Miss Out: Five Strategies for Getting the Most Out of Your IRA
Getting the Most From Your IRA
1.
Contribute early in the year.

 

“If you aren’t planning on making an IRA contribution this year, think again. Even if your contribution isn’t tax deductible, every dollar you contribute is a step toward achieving the retirement you want. And every dollar you don’t contribute is a lost opportunity.”

 

MALIK KING

VICE PRESIDENT, RETIREMENT PRODUCT MANAGER, J.P. MORGAN

2.
Contribute for a nonworking spouse.

The Power of Tax-Deferred Compounding

Tax-deferred retirement accounts provide added savings benefits vs. taxable accounts

The Power of Tax-Deferred Compounding

If you contributed $5,500 each year for 30 years in a Traditional IRA, assuming 6.5% returns, your account would have grown to $505,941. Assuming you paid taxes on earnings at withdrawal, you would have $454,800, $420,706 or $393,430 in after-tax dollars at the 15%, 25% and 33% federal tax rates, respectively. However, if you had contributed to a taxable account, you would have ended up with only $341,671. That’s the power of tax-deferred compounding.

Source: J.P. Morgan Asset Management. Assumes $5,500 after-tax contributions at the beginning of each year for 30 years and 6.5% annual investment return. IRA account balance is taken as a lump sum and taxed at the 15%, 25% and 33% federal tax rate, respectively, at time of withdrawal. Taxable account contributions are after-tax and assume a 33% federal tax rate during accumulation. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees, expenses or early withdrawal penalties. The chart is shown for illustrative purposes only. Past performance is no guarantee of future results.

3.
Take advantage of “catch-up” contributions.

 

Traditional vs. Roth IRAs: Key Differences and Similarities

Source: Internal Revenue Service, January 2019

Features Traditional IRA Roth IRA
4.
Contribute and convert.
If you do not have an existing IRA
If you have existing IRAs
5.
Kick-start savings for the next generation.

 

Five Questions to Ask Your Advisor

  • Can I deduct my IRA contribution if I have a retirement plan at work?
  • Does it make sense to consolidate my IRAs?
  • Should I change my beneficiary designations?
  • How much income will my retirement accounts provide in retirement?
  • Am I saving enough?
NEXT STEPS

You may want to consider consolidating your retirement accounts. If you’ve changed jobs over the course of your career, you’re very likely to have accumulated retirement savings in different accounts. Consolidating can help you keep track of your holdings and more carefully align your investment strategies with your retirement goals. Review your options and consider the benefits of consolidating your retirement savings accounts, including whether consolidating makes sense for your situation.

 

Savvy IRA strategies are just one way to save for the retirement you want. Whether your retirement is in the near future or years away, now is the time to review your plans. Whether you invest independently, or work with an Advisor, you should determine whether you’re on track to meet your goals and look at your retirement plans holistically.

 

JPMorgan Chase & Co. and its affiliates do not render accounting, legal or tax advice. Estate planning requires legal assistance. You should consult with your independent advisors concerning such matters. Investment ideas presented herein may not be suitable for all investors. Not all investment ideas referenced are suitable for all investors. Investing involves market risk, including the possible loss of principal. There is no guarantee that investment objectives will be reached. Diversification does not guarantee a profit or protect against a loss.

 

Opinions and estimates offered constitute our judgment as of the date of this material and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described herein may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.


Investment products and services are offered through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMS, CIA and J.P. Morgan Chase Bank, N.A. are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

© 2019 JPMorgan Chase & Co.

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