Five retirement investing myths
Just like anything else, retirement saving comes with its share of myths. And they may not be harmless—believing them could derail long-term savings plans. Let’s look at a few common myths and then get the real story.
Myth 1: Starting an IRA is complicated
On the contrary. At E*TRADE from Morgan Stanley, investors can open an E*TRADE IRA in around 15 minutes and make their contribution for the year online. It’s that easy. Really. For those who do not know which IRA they may qualify for, check out the IRA Selector Tool to help better understand your options and how an IRA may benefit you.
Myth 2: There’s no benefit to funding an IRA if the contributions can’t be deducted
Sounds true-ish, right? But we’re busting myths here. If someone is already contributing to a 401(k), and their income exceeds certain limits, their IRA contributions may not be deductible. But even in that case, an IRA still has a tax advantage: earnings have the potential to grow tax‑deferred until withdrawal.
Myth 3: Individuals can’t contribute to an IRA if they have a 401(k)
Not so much. Even if you max out your 401(k), you can still contribute up to the maximum contribution limit into an IRA. Why do it? Because it’s a good way to save more and still enjoy the potential tax advantages on the earnings in an IRA.
Myth 4: Retirement plans can’t be adjusted
Not only can they be adjusted, they may need to be—life changes, right? In just a few steps and 15 minutes, the E*TRADE Retirement Planning Calculator (login required) can help create an up-to-date retirement strategy based on current circumstances and goals. Once the plan is saved, go back and adjust whenever needed.
Myth 5: The more retirement accounts, the better
More retirement assets? Definitely good. More retirement accounts? Not necessarily good. Investors should consider consolidating IRA accounts into one. It makes account management much simpler—just one statement, just one beneficiary designation. Equally important, with a single account it’s easier to track asset allocation and rebalance a portfolio if it drifts away from its target. If it makes sense, investors can transfer IRAs to E*TRADE. Simplify life and take advantage of our professional guidance and ongoing retirement planning.
These myths should not stop people from having the retirement they dream about. E*TRADE offers the education, tools and resources needed to help pursue long-term savings goals.