How Can I Grow Money Safely in a Roth IRA?

Dear Liz, 

I have a small Roth IRA that will mature in a few weeks, and I have been advised to leave it as is. How long can I wait to make a decision? Where else might I be able to move the money to continue to grow safely? I am 63, widowed and self-employed. My only other retirement money is a variable annuity. -- Becca

Dear Becca,

Like many people, you've confused the bucket you put investments in with the investment itself. You've also got the idea that you can have growth and safety at the same time, which you can't.

Roth IRAs don't "mature," but an investment held inside of a Roth IRA might. It sounds like your Roth IRA holds certificates of deposit or bonds, since those are investments that typically mature or stop growing at a specified date. You can roll the money into a similar investment, but you may find the return or yield to be lower than what you previously received, particularly if you've owned the previous investment for a while.

The problem with seemingly "safe" investments is that they often don't offer returns large enough to offset inflation. So every year your buying power shrinks.

To sustain you through what could be decades in retirement, you likely need to take more risk. Also, as a self-employed person, you probably have access to better tax-advantaged savings options than a variable annuity. Variable annuities offer tax deferral but no tax deductions, and often have high expenses that reduce returns.

Now is the time to hire a fee-only planner, compensated only by fees clients pay rather than by commissions, to review your financial situation and give you advice about the best way to move forward.

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