Page 9 - DecemberMag2024.12.11.24

PRODUCT KNOWLEDGE

Jeff Long
Sales Director

The Importance of

Regular Contributions to Your IRA

aving for retirement can feel daunting, but you may find yourself having to contribute a large sum
making regular contributions to an Individual toward the end of the year to meet your retirement goals.
Retirement Account (IRA) is one of the sim- This last-minute scrambling can strain your budget and
plest and most effective ways to secure your potentially limit your contribution options, as IRAs have
S financial future. Even if retirement seems far annual contribution limits. For 2024, the limit is $7,000.
00
off, starting early and contributing regularly for those under 50 and $8,000. for those 50 or older.
00
to your IRA can make a significant difference. Here’s why By making regular, smaller contributions throughout the
these regular contributions are so important and how they year, you can meet your goal without a financial squeeze.
can benefit you in the long run. 4. Building a Savings Habit
1. Harnessing the Power of Compound Interest Saving is a habit, and the more you practice it, the easier it
One of the biggest advantages of contributing to an IRA becomes. When you commit to regular IRA contributions,
is compound interest, which means you’re earning inter- you make saving a natural part of your monthly budget.
est on both your contributions and any previous interest Over time, this can lead to a greater sense of financial
earned. When you make regular contributions, even small discipline and security, making it easier to stick to your
amounts, your IRA grows faster because you’re continu- retirement goals.
ally adding to the base amount that earns interest. Over Setting up automatic transfers from your bank account
time, this compounding effect can substantially increase to your IRA is one way to make this habit even easier. With
your retirement savings. automatic contributions, you don’t have to worry about re-
For example, if you contribute just $200. a month start- membering to save; it happens on its own. Contact the
00
ing at age 30, you could end up with over $250,000. GCU Call Center to assist you with setting up automatic
00
by age 65, assuming an average return rate of 6-7% per contributions to your current IRA.
year. If you wait until age 40 to start contributing, you’d 5. Staying on Track with Your Retirement Goals
only have around $120,000. by retirement with the same It’s easy to underestimate how much you’ll need for retire-
00
contribution amount. Regular contributions let you make ment, especially with inflation, healthcare, and the possi-
the most of your money through compound growth. bility of a longer retirement lifespan. Regular contributions
2. Taking Advantage of Tax Benefits to your IRA help you stay on track with your retirement
IRAs offer tax advantages that help your money grow faster. goals and give you a clearer picture of your progress.
A Traditional IRA allows you to make tax-deductible contri- Each month, you can watch your balance grow and assess
butions, meaning you can reduce your taxable income and if you’re on pace to meet your target.
lower your tax bill in the present. With a Roth IRA, contribu- If your circumstances change—like a salary increase or
tions are made after-tax, but your withdrawals in retirement unexpected expense—regular contributions allow you to
are tax-free. This tax-advantaged growth can mean more adjust without having to rethink your whole retirement plan.
money in your pocket when you need it most. Small Steps, Big Results
Regular contributions can help you consistently take full Making regular contributions to your IRA is one of the
advantage of these tax benefits. If you wait until the end of smartest steps you can take for your retirement. It helps
the year or only make occasional contributions, you might you harness compound interest, benefit from tax advan-
miss out on the full potential of these tax perks each year. tages, avoid last-minute stress, and stay on track with your
3. Avoiding the Last-Minute Scramble financial goals. Plus, it turns saving into a habit, helping
One of the downsides to irregular contributions is the you build a more secure financial future one step at a time.
stress of trying to “catch up” later. If you put off saving,

GCU MAGAZINE DECEMBER 2024 7