Opening an IRA is easy, but navigating your account’s rules and regulations can be complex — and potentially costly.
To help you avoid mistakes, we go over some doozies here. But the biggest mistake you can make with IRAs is not contributing to one at all.
“If you don’t put anything in, you won’t have anything at the end,” says IRA expert Ed Slott, president of Ed Slott and Co., and author of “The Retirement Savings Time Bomb … and How to Defuse It.”
Each year that you’re eligible to make IRA contributions, and don’t, is a chunk of retirement income lost. The most significant factor in the amount of money accumulated at retirement is the amount you save, not the rate of return on investments.
In general, “the person who doesn’t skip years will end up with more money in retirement,” says Ken Hevert, a vice president of retirement products at Fidelity Investments.