Money In/Money Out
Now that you have a good overview of how much of your money you can put into your IRA and when you can do it, let's focus on the time when you will reap the rewards of your disciplined savings. In the list of fine points in the previous section, you saw that you may begin to withdraw money at age 59½. Should you decide to delay taking money out, you have eleven more years to sit on your nest egg. There is no requirement that you take distributions from your Roth IRA; however, at age 70½ you must begin to make regular IRA withdrawals from your traditional IRAs. If you think about it, Uncle Sam has waited a long time to see any tax receipt on the dollars you earned years and decades earlier. By setting a point in time for you to withdraw money, and begin paying taxes on it, our fair government will see revenues it needs to operate.
You do not need to deplete your account. You want your resources to last as long as you do. None of us gets advance notice of the precise date of our exit from this planet. You may, and should, name beneficiaries to receive remaining proceeds from your IRA at the time of your death.
Whether or not a traditional or Roth IRA makes sense for you can only be decided in the context of an overall financial plan designed to secure your retirement. In Chapter 3 we will look at company plans, including SIMPLE and SEP IRAs.
Keep in mind that creating a savings plan, and sticking to it, is a challenge. Once you have made up your mind to take action and begin saving, you can place all your energy into finding the best places to invest and protect your money.