While the Roth IRA is a good financial tool that has stood the test of endurance for decades, it isn’t without cracks in its armor. There are caveats to consider for those looking into investing in one. One aspect that some investors could balk at is the fact that there is a specified limit to how much a middle-aged investor can put into a Roth IRA. The cap comes at 5,500. While the Roth IRA is a good tool it has little to offer those with higher income and they work better as part of an overall investment strategy and less well as a stand-alone tool.
- The Roth IRA, while a great financial planning tool, does not work especially well for those in a higher income bracket.
- Basically a Roth IRA works better as a part of an overall set of financial tools, rather than as a stand-alone option.
- The top marginal tax bracket in the U.S. period was 70% in 1977, which is a far cry from today when the same bracket is now is 37%.
“While the IRS lets me defer up to $18,500 (in 2018) to my 401(k), it only lets me contribute $5,500 to a Roth IRA (since I’m 49 or younger). From my experience, I’ve seen this stifle contributions from people who otherwise would increase their retirement contributions each year, if they were to primarily focus on the 401(k).”
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