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What is a Roth IRA, how does it work, and why might you want one as part of your retirement strategy?
In this episode of the Washington State Retirement Planning Podcast, we break down the Roth concept in simple terms, including how Roth IRAs differ from pretax retirement accounts and why paying taxes today can potentially give you tax-free growth and withdrawals in retirement.
We use a simple example to explain the difference between paying taxes now versus paying them later, then cover Roth IRA contribution limits, Roth conversions, and why having both pretax and Roth money can provide valuable tax diversification in retirement.
We also answer a listener question about whether you should move money out of the market because of concerns about an imminent crash. We discuss why trying to time the market is so difficult, how diversification can help, and why having rules and indicators can be better than making investment decisions based on fear or gut feelings.
Finally, we look at why market risk becomes especially important as you approach retirement and why trying to double your portfolio in your final years before retirement can create unnecessary risk.
00:00 What Is a Roth IRA?
03:08 Roth IRA income limits and Roth conversions
04:06 Why tax diversification matters in retirement
05:01 Should you move your money because of a market crash?
08:16 The danger of taking too much risk before retirement
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DISCLAIMER
**Advisory Services offered through Intirety, LLC a registered investment adviser. Intirety LLC and Scenic Financial are not associated with the Washington State Department of Retirement in any way. Scenic Financial makes content available as a service to its clients and other visitors, to be used for informational purposes only. While our best intentions are to provide accurate and timely information, you should always consult with retirement, tax, and legal professionals prior to taking any action. 🕸️
