Financial services provider Barry Bulakites offers insights into IRA contributions and management in an uncertain economy.
DENVER, COLORADO, August 2, 2022 — When the economy is uncertain and recession fears loom, confidently planning for retirement becomes more difficult, but it is still necessary to save and plan ahead. Financial services provider Barry Bulakites is an expert in retirement planning and IRA management, and he reports there are benefits to keeping IRA contributions steady during a recession or economic downturn.
Bulakites also advises there are additional ways to maximize contributions and common financial mistakes to avoid.
Roth IRA Benefits
When stocks are down during a recession, it is an excellent time to invest for overall portfolio growth. Investing through any retirement vehicle, such as a 401(k) or a traditional IRA is OK, but there are unique benefits to using a Roth IRA during a recession. The income deposited in a Roth IRA is taxed at the current tax rate, but earnings in the account through retirement are tax-free, Barry Bulakites reports.
By purchasing stocks at lower rates while the economy is in a slump, there is the opportunity for massive growth over time without the burden of excessive taxes on the earnings when it is time for a withdrawal in the retirement years. While other retirement accounts provide access to the eventual rebound of stock prices and earnings, the tax burden in retirement could be substantial if a tidy nest egg is accumulated.
According to Barry Bulakites, the 2022 maximum contribution to a Roth IRA is $6,000 for an individual under 50. At 50 and over, the limit increases by $1,000. If possible, hit the individual threshold to maximize the retirement portfolio.
Avoid Early Withdrawal Temptation
During a recession, Barry Bulakites advises many start to consider taking an early withdrawal from retirement accounts, but this is a major mistake in most circumstances.
By cashing out from an IRA when the market is low, the low stock prices and earnings are locked in on the portion of the IRA funds removed. When funds are able to stay in the account and remain in stocks, it is possible to wait out a market decline or recession and recover some or all of the losses. If the idea of investing in more stocks is scarier as retirement approaches, it is possible to self-direct new contributions to a different type of investment. This can be done while leaving older funds in place until a sufficient recovery level is reached.
As time goes by, they can also be moved within the IRA to new investment types, combining conservative financial planning with the opportunity for aggresive growth — a solid investment strategy for any retirement portfolio.