Finance guru reveals the account you should be ‘putting every single cent into’ for major tax benefits and a supercharged retirement fund

Personal finance expert Suze Orman has some strong words for Americans who want to eventually retire: Put all the money you can into a Roth IRA.

A Roth IRA is a type of individual retirement account where you contribute after-tax dollars from your paycheck — and as money whiz Orman notes, all future withdrawals are tax-free.

That’s much more financial freedom than offered by other retirement plans, including a 401(k).

These types of accounts are funded with pre-tax money, she adds, so your entire dollar has a chance to compound.

At a time when every cent counts, advice is more than welcome and can give your money a much-needed boost.

“If you’re not saving for retirement in a Roth, I think there’s a good chance you’re making a mistake,” the former CNBC host said. Benzinga Tuesday.

“If you plan to leave your retirement savings as an inheritance, a Roth 401(k) is better here, too,” she continued, explaining how the benefits of a Roth extend far beyond their favorable tax treatment.

For this, she points to their flexibility, especially in the areas of estate planning and succession strategy.

“If you have a retirement account at work that matches your contribution, invest up to the point of the match,” she further advised, telling those who have access to employer-sponsored retirement plans to take advantage of them.

“Next, fully fund your Roth IRA.”

In terms of inheritance, heirs can inherit Roth accounts without the burden of income taxes, she said — not the case with cash or inheritances, of which Uncle Sam will always get a cut.

This could be a significant benefit for those in a higher tax bracket, Orman pointed out, telling Americans how to protect the wealth they’ve worked hard for.

For the less fortunate, there are no tax breaks for the current year, so your contributions – no matter how small – can grow tax-free.

This can be done once the account has been open for five years, or after the account holder reaches age 59.5, Orman denied, while repeatedly touting the flexibility of Roth’s penalty-free withdrawals.

A Roth 401(k) — available only through certain employers — is even better, she said.

The main difference between a Roth and a traditional 401(k) is when taxes are charged, she added. She explained how in a traditional 401(k), contributions are made pre-tax, while in a Roth 401(k), contributions are taxed. in front.

But for those without access to such an option, a Roth IRA will certainly suffice, she said, citing how ccontributors can withdraw their contributions at any time without penalty, regardless of their age or the term of the funds.

This feature is especially attractive to people who may need to access their money before retirement due to unforeseen circumstances, although you will have to wait until you are 59.

Despite the obvious benefits, it is important to consult a financial advisor to determine the best savings strategy for your specific situation. This depends on your tax bracket, your ability to take financial risks and your post-retirement goals.

A financial advisor can consider all of these things, Orman said — a decade after her wildly successful television show host went off the air after 14 years.

She was considered one of the US’s most visible personal finance gurus at the time and was set to develop a new series for Warner Bros. Telepictures Productions, which was supposed to premiere in 2016, but was never produced.

In 2020, she co-founded SecureSave, a company whose sole purpose is to change the savings rate in America.

She now works relentlessly to provide emergency savings plans tailored to working Americans depending on their situation.