If you’re nearing the end of your college career, you have a lot to think about. Transitioning into the adult world can be stressful and scary. While you navigate the transition, one thing you should consider is opening a Roth IRA account. Here are a few reasons why every new graduate needs a Roth IRA account.
It’s Never Too Early
If the COVID-19 pandemic has taught us anything, it’s that you can never be too safe. The earlier you start saving retirement funds, the better off you’ll be in the long run, especially if any unexpected turns of events were to happen.
All emergencies aside, investing while you’re young will give you a comfortable cushion in retirement. There are limits to how much you can invest based on your salary, but starting early with a small amount will pay off in the long run. If you’re looking for more freedom in how you invest, a self-directed IRA can be just as beneficial.
It Offers Immediate Benefits
The goal of your account is to save for retirement, but a Roth IRA account has some more immediate benefits as well. For example, when you graduate college and secure a job, the IRS will permit you to withdraw a total of $10,000 from your Roth IRA to put toward your first home without penalties. As long as you have had an account open for five years or more, you can use this tax-free money to buy a home.
You Can Use It as an Emergency Fund
If necessary, you can access the investments you put into your Roth IRA as emergency funds. If you want to start investing in your future but you’re worried about investing money you may need later, a Roth IRA account is the best investment option.
Getting a jump start, reaping the additional benefits, and having emergency funds are some of the top reasons why every new graduate needs a Roth IRA account.