IRA for self-employed
Hi Terry!
My mother, who just turned 60, has been self employed most of her life and doesn’t really have any retirement savings aside from what she’ll get from Social Security. I was thinking that she should open an IRA to hopefully help with savings and gains over then next 10 years she plans on working. Would you advise that she open a SEP (traditional) IRA or would Roth be the smarter way to go? Or any other advice how to help supplement her retirement income?
Terry Says
At this stage of her life, she probably doesn’t need the deduction, so I’d go with a Roth. She will not be required to make minimum withdrawals at age 72, and must keep the money in there for at least 5 years before withdrawing if she needs the cash. But all the money will come out tax-free down the road.
The next question is choice of investments. Go someplace like Vanguard or Fidelity to open the account, and maybe choose something conservative like an Equity/Income fund. There will be ups and downs, but if she can wait until age 70 to start withdrawals she should come out ahead.
