Skip to main content

Main Header

Important Notifications

IRAs What are They

November 5, 20184 minute read

What is an IRA?

Retirement Statistics

  • Average retirement age: 63
  • Average length of retirement: 18 years
  • Average savings of a 50-year-old: $42,797
  • Total cost for a couple over 65 to pay for medical treatment over 20 years: $218,000
  • Percentage of people ages 30-54 who believe they will not have enough saved for retirement: 80%
  • Percentage of Americans who don't save anything for retirement: 38%
  • Number of Americans who turn 65 per day: 6.100

Amount Needed in Savings for Retirement*

Monthly Income Needed Savings Needed for 20 Years Savings Needed for 30 Years
$1,000 $166,696 $212,150
$2,000 $333,392 $424,300
$4,000 666,783 848,601
$5,000 $833,479 $1,060,751
$8,000 $1,333,567 $1,697,201
$10,000 $1,666,958 $2,121,501

Source: Statistic Brain

If you are staring at these numbers with a dumbfounded look and thinking to yourself, “Ugh…evidently I’m working until the end of time!” I want to tell you that there are still things you can do to prepare.

So how do you avoid becoming one of these (scary) statistics? You should first start at your place of employment. Most employers offer a retirement plan to you as part of their benefit package. Whether it be a pension plan, 401(k), deferred comp, etc., the best solution is to participate. Some of these plans even match what you put in – that could be considered free money!

But what if your employer doesn’t offer a retirement plan? Or maybe you want to be able to supplement your work retirement plan? That is where an Individual Retirement Account, better known as an IRA, could be the missing piece to your retirement puzzle.

What exactly is an IRA? Let me first clear up a common misconception with IRAs; these are accounts, not investments. The phrase “I want to invest in an IRA” doesn’t quite make sense. To clarify – I want you to think of it as an empty basket. When you open an IRA, you are essentially handed a basket with absolutely nothing inside of it. The next step is to put some fun things inside of it! There are many products available to you that you can throw into your basket, including, but not limited to, savings accounts, CDs and – depending on your risk tolerance and time horizon – stocks, bonds, and mutual funds. When you say, “I want to open an IRA savings account,” what you are really saying is, “I want to open up an IRA and put a savings account inside of it.”

Moving right along. So how do you know what to put inside your new fancy IRA basket? Well… it depends. IRAs are designed (surprise, surprise) for retirement. For many of you, this should be considered a long-term goal. Although you can put a savings account or a CD inside of an IRA – they might not be appropriate for your long-term needs. Think about it – if you plan to retire in, say, 25 years – the money you put inside of your savings account earning 0.10% (the current rate at WSECU as of this article) won’t grow very fast, now will it? Similar to your retirement plan at work – if you are contributing to, for example, a 401(k) through your employer, do you think that your money is being invested in savings accounts? Not exactly. For long-term growth opportunities, investment products such as stocks, bonds, and mutual funds are potential better options, again, depending on your risk tolerance and time horizon. (Stock and mutual fund investing involves risk, including loss of principal. Mutual funds will fluctuate with market conditions and may not achieve their investment objective.)

What are the benefits of an IRA?

Many financial experts estimate that you may need up to 85% of your pre-retirement income in retirement 1. An employer-sponsored savings plan, such as a 401(k), might not be enough to accumulate the savings you need. Fortunately, you can contribute to both a 401(k) and an IRA. (Contributions to a traditional IRA may be tax deductible in the contribution year with current income tax due at withdrawal. Withdrawals prior to age 59½ may result in a 10% tax penalty in addition to current income tax.) Some of the ways that an IRA can benefit you:

  • Supplement your current savings in your employer-sponsored retirement plan.
  • Gain access to a potentially wider range of investment choices than your employer-sponsored plan.
  • Take advantage of potential tax-deferred or tax-free growth.

Planning for retirement can often be stressful and the options available to you may appear confusing and complicated. Let a professional help you determine your needs and help you achieve your goals. To learn more, reach out to our Investment team at WSECU Investment Management to explore your options. You can reach us at 800.456.3152 or you can visit our web page for contact information.

Brett Lathrup
Associate Financial Advisor

1Source: Aon/Georgia State Replacement Rate research The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.


Securities offered through LPL Financial member FINRA/ SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Financial planning services may be offered through Washington State Employees Credit Union d/b/a WSECU Investment Management, a registered investment advisor and separate entity from LPL Financial. Financial planning and other advisory services may be offered through LPL Financial, a registered investment advisor.

Not NCUA Insured | No Credit Union Guarantee | May Lose Value

WSECU Investment Management is a registered investment advisor in the State of Washington. The advisor may not transact business in states where it is not appropriately registered, excluded, or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.

WSECU and WSECU Investment Management are not registered broker/dealers, nor are they affiliated with LPL Financial.

The LPL Financial registered representatives associated with this site may only discuss and/or transact business with residents of the following states: AK, AZ, CA, CO, CT, DC, FL, GA, HI, IA, ID, IL, LA, MA, MD, ME, MI, MO, MN, MT, NC, NE, NJ, NM, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA, WA, WI, WV.

NDIP (Non-deposit Investment Products) may be offered by an employee who serves both functions of the credit union and the selling of non-deposit investment products.

Your Credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services. Please visit for more detailed information.

Your perspective is important to us and helps us see where we’re hitting the mark and where there might be areas to improve.