How Can a Roth IRA Benefit My Retirement?

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A Roth IRA can help you achieve greater financial security in retirement.

After you enter retirement, your daily living expenses do not suddenly disappear.

You still have bills to pay and groceries to purchase.

Many people also have mortgages and other debts to pay off.

When you add up these figures and the typical increase in healthcare costs, you may find that Social Security will be insufficient to cover all of these expenses.

According to a recent article titled “3 Reasons a Roth IRA Is a Perfect Supplement to Social Security,” the average monthly Social Security check is only about $1,500 and is not designed to be the sole source of income in retirement.

A Roth IRA can give you flexibility in retirement.
Using a Roth IRA can minimize financial stress in retirement.

What can you do?

An ideal option for many is to utilize a Roth IRA.

Why might this be a good option for you?

A Roth IRA can be funded at any age.

Some seniors elect to work part-time in retirement.

For some, this is a financial necessity.

For others, this is simply a hobby.

If you have a Roth IRA, you can contribute earnings even in retirement.

This allows your money to enjoy tax-free growth if you do not need your full paycheck.

Roth IRA Withdrawals do not trigger taxes on your Social Security benefits.

It is unlikely for your Social Security benefit to be taxed by the federal government if it is your sole source of income.

If you have other income and it causes your earnings to exceed a specific threshold, your Social Security may be taxed.

How can you calculate your potential tax liability?

Start by calculating your provisional income.

Your provisional income includes your non-Social Security income and half of your yearly benefit.

If this number is between $25,000 and $34,000 when filing as a single individual or between $32,000 and $44,000 for a couple, you may be taxed on up to 50 percent of your benefit.

If your income is higher than the upper end of the applicable threshold, you could be taxed on up to 85 percent of your benefits.


Because contributions to a Roth IRA are made after taxes, withdrawals will not be counted in your provisional income.

A Roth IRA provides flexibility.

With a traditional IRA, you will have to withdraw a required minimum distribution upon reaching a certain age.

After all, the government wants to tax this money at some point in time!

With a Roth IRA, you are not obligated to remove money.

If you do not need it, you can let you money remain in the account to grow tax-free.

You can also leave it to your heirs without complicating their tax situation through required distributions.

Although these are certainly favorable reasons for contributing to a Roth IRA, a Roth IRA is not the only means of supplementing your Social Security income.

Work with an experienced estate planning attorney and financial planner to find the best solution for your goals and circumstances.

You gotta run the numbers.

Reference: (Oct. 5, 2020) “3 Reasons a Roth IRA Is a Perfect Supplement to Social Security”

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