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Quite simply the best way to start saving for retirement is through an IRA, but the type of account you choose can make a big difference in how much money you’ll receive when you’re no longer working and how the taxes work.
Traditional IRAs and Roth IRAs are the two most popular types of retirement accounts for individuals, but they have considerable differences that any investor should take into account before choosing which to open.
With Traditional IRAs, you delay paying any taxes until you withdraw funds from your account later in retirement. Your tax rate at retirement should be fairly low but that may not necessarily be the case. With Roth IRAs, however, you contribute with after-tax dollars and later in life your withdrawals are completely tax-free (as long as your account has been open for at least five years).
Summary of key differences:
