What's an IRA and How Can It Work For You?
The Northrop Grumman Savings Plan can be one of your most valuable savings tools. However, if you are saving all you can in the plan or are looking for another saving opportunity, an individual retirement account (IRA) can be an attractive option.
An Additional Retirement Savings Option
An IRA can be a useful savings tool for retirement. When you save money into an IRA, you are able to direct how your money is invested. You can generally invest in stocks, bonds, and mutual funds in an IRA.
There are a number of different types of IRAs available, but we’re going to focus on the two most common: Traditional and Roth IRAs.
You can invest up to $5,000 into a Roth* and Traditional IRA, combined ($6,000 for individuals aged 50 or more) in 2009. These limits are subject to change in future years. In general, your total IRA contribution (including catch-up contributions) for the year cannot be greater than your earned income for the year. There are also certain income eligibility requirements to participate in a Roth IRA. In 2009, the limits are:
- $176,000 for individuals who are married and file a joint tax return
- $10,000 for individuals who are married and file a separate return but lived with their spouse at any time during the year
- $120,000 for individuals who file as single, head of household, or married filing separately and did not live with their spouse at any time during the year.
In order to determine if you are on target to reaching your retirement income goal, you need to consider all of the possible income sources available to you. These generally include Social Security, employer-sponsored retirement plans, and your personal savings. IRAs fall into the “personal savings” category and can be a good savings tool for your future retirement income. However, financial advisors generally recommend that you should take full advantage of your employer-sponsored plans, such as the Northrop Grumman Savings Plan — especially when matching contributions are available — before investing in personal saving investments, such as IRAs.
You can open an IRA at many financial institutions, including discount brokerage firms, most banks and credit unions, or even through your financial advisor. No matter what option you choose, just be sure to do your homework to compare the fees and commissions from each financial institution to get the best deal.
An IRA can be a very useful retirement savings tool and can help you save the retirement income you may need in addition to Social Security and your Savings Plan. You should consult with your financial advisor to ensure an IRA is right for your financial situation.
This Investment Center includes links to tools and information provided by organizations that are not associated or affiliated with Northrop Grumman. The tools and information provided by these organizations are not the property of Northrop Grumman, and Northrop Grumman is not responsible for their accuracy, completeness, or continued availability. You are solely responsible for the investment and asset allocation decisions you make pertaining to your personal savings and investments, including investments in the Northrop Grumman Savings Plan, Financial Security and Savings Program, and any other savings plans sponsored by Northrop Grumman.