What is an IRA?

An IRA, or Individual Retirement Account, is a financial tool that allows individuals to save and invest for their retirement. It is a type of tax-advantaged account offered by financial institutions and investment firms. The primary purpose of an IRA is to provide individuals with a way to save and grow their retirement funds through various investment options such as stocks, bonds, mutual funds, and other assets. One of the key benefits of an IRA is the ability to contribute pre-tax income, which can help lower an individual's tax liability. Additionally, earnings within an IRA are tax-deferred or tax-free, depending on the type of account. IRAs also offer flexibility in terms of contribution limits, withdrawal options, and the ability to transfer or roll over funds without incurring tax penalties. Overall, an IRA is an essential retirement planning tool for individuals looking to secure their financial future.