If you are young and if you think taxes are going to rise during your working life (and who doesn't?), then investing now in a Roth IRA is a major money move that will pay off big at retirement.
You can contribute any amount to a Roth IRA, up to $6,000 per year. For those aged 50 and over, it is $7,000.
These contributions must be made from earnings from employment. The money represents money you have already paid taxes on. So there is no tax deduction for contributions.
But the beauty is that earnings in your Roth grow tax-free and qualified distributions are also tax-free. In other words, you might be paying a lower tax today on your money than you would pay on the money 30 years from now.
An example from Kiplinger Personal Finance: A 25-year-old contributes $5,000 each year until retirement at age 67. Assuming the account earns 8 percent, the total available would be $1.6 million. All withdrawals would be totally tax-free.
Rick Good spent ten years in the newspaper business, including with The News & Observer (Raleigh, NC) and The Greenville News (Greenville, SC). He co-wrote, with Melinda Coleman, Rutledge to Riley: Governors of South Carolina, 1776–Present (Published by The Greenville News), and is the author of Mind Games Trivia #1 (Amazon). He has recently spent 15 years creating original trivia content through Sounds Good Mobile Entertainment and continues that with his new company, SGME Software. He edits The Smart Reader’s money, real estate, and business coverage.