How to set up a retirement savings account

It's never too early — or too late — to start saving for your retirement.

You Will Need

* An investment provider
* Money to contribute

Step 1. Know your rights

Realize that even if you are already contributing to your company’s 401(k) plan, you are free to establish an individual retirement account, or IRA, as well.

Step 2. Think about a Roth IRA

Weigh the advantages of a Roth IRA. Taxes are taken at the get-go so you can withdraw money tax-free in your golden years. You may remove money, penalty-free, before age 59.5 for certain reasons, like buying a home, you may keep your money in it as long as you like, and you may continue paying into it past age 70.5 if you have earned income.

Step 3. Consider an IRA

Consider a traditional IRA, which lets you defer paying taxes on the money you invest until you start withdrawing it at retirement. You can’t contribute to an IRA past your 70th birthday, and you must begin taking distributions six months after that.

Step 4. Investigate providers

Find an IRA provider to set up your account. Options include banks, brokerage houses, mutual fund companies, credit unions, and insurance companies.

Step 5. Ask about fees

Before picking an IRA provider, ask about fees and commissions.

Step 6. Diversify your investments

Diversify your investments so that you’re mixing stocks (both U.S. and foreign), bonds, real estate, and commodities.

Step 7. Learn about self-directed IRAs

If you’re financially savvy and want to be a real estate speculator or help finance a new business, consider opening a self-directed IRA, which allows you to grow your retirement fund in nontraditional ways.

Step 8. Make investing automatic

Make contributions to your IRA automatic by having them withdrawn from your bank account or paycheck.

Step 9. Put in the maximum

Put in the maximum allowed every year. You’ll thank us later.