IRA

Launch of the first-ever retirement waitlist for an IRA with a 1% match by Robinhood

Robinhood Retirement, the latest offering from the investment app, was launched this morning. Users can now sign up for the waitlist for Robinhood Retirement. This will enable customers to open an IRA. They can also pick whether to start saving for retirement with a standard or Roth IRA.

With the help of Robinhood’s IRA product, savers who are presently not receiving an employment match can expand their retirement savings for the first time. Robinhood will match 1% of every qualified dollar donated to the account.

When people sign up for the waitlist, they can anticipate getting access to the product gradually until all customers have full access in January 2023.

When you’re decades away from retirement, saving for it may not seem like your most urgent financial objective. But starting early is crucial if you want to accumulate the money you can rely on in your later years. However, some savers still require an extra push.

According to a recent study by Pew Charitable Trust, 77% of savers and atypical workers said they would enroll in a defined contribution savings plan if they were qualified, and access to workplace plans is the biggest obstacle they face.

What is IRA?

To make matters worse, the economic consequences of the epidemic have made future retirees less inclined to prioritize retirement savings. According to a Bankrate survey from 2022, 55% of Americans believe they are falling short of their retirement savings objectives, with roughly 35% saying they are “seriously behind” and 20% saying they are “slightly behind.” Again, inflation is the main factor causing people to brake their retirement savings.

“You should be considering saving for retirement and the longer term,” says Stephanie Guild. Stephanie is Robinhood’s head of investment strategy. “There’s inflation. Government debt is almost at the highest levels we’ve seen in its history. And that means that things like Social Security and stuff that was there for people in previous generations are probably not guaranteed. Now is the time to say, ‘I’m gonna do this for future me so I can rely on myself.”

IRA

A tax-advantaged retirement savings account is known as an IRA. Users can open one of each kind of IRA with Robinhood’s new product:

Traditional IRA: With a traditional IRA, anybody with earned income can make before-tax contributions and allow their savings to grow over time (tax-deferred) until they’re withdrawn in retirement. Qualifying donations may be tax-deductible, helping savers lower their taxable income.

Roth IRA: A Roth IRA is different in that investors now pay taxes on their contributions to withdraw money tax-free in retirement. Savers must have a modified adjusted gross income (MAGI) of less than $144,000 for single filers and $214,000 for joint filers to be eligible for a Roth IRA.

Ways to boost retirement savings

You can continue to contribute to a regular or Roth IRA even if you’re already saving money for retirement through an employer-sponsored plan like a 401(k). However, remember that if you or your spouse participate in another workplace retirement plan, you might not be allowed to deduct all of your traditional IRA contributions, and your Roth IRA contributions might be restricted if your income reaches a particular threshold. It’s crucial that funding an IRA has a unique set of advantages.

Even though most workers may have the same long-term objective of retiring at some point, each saver’s strategy for getting there differs slightly. Here are a few ideas to speed up your savings plan and possibly reduce that period:
1.Do not toss away any free money: Instead, aim to make the most considerable contribution necessary to receive 100% of any match provided to you. Sam Nordstrom, manager and product lead for retirement investing at Robinhood, claims that if you save for retirement with Robinhood instead of any other IRA available, you will receive an additional 1%.

2.As your income rises, try to increase your contributions: You could be tempted to succumb to lifestyle inflation as your income increases by splurging on a more opulent home or automobile, taking more frequent holidays, or making impulsive purchases.

3.Don’t put off starting to save for retirement—start today: The secret to creating your nest egg is to get started as soon as possible, even if you cannot make sizable contributions.