Ready to get started? Open an IRA today
What is an IRA?
An IRA (individual retirement account) is a personal, tax-deferred account the IRS created to give investors an easy way to save for retirement.
Why invest in an IRA
Tax-deferral
Delaying the payment of income taxes on earnings generated in an investment account. For example, if you have a traditional IRA, you don't pay income taxes on the interest, dividends, or capital gains accumulating in the account until you begin making withdrawals.
Compounding
The snowball effect that happens when your earnings generate even more earnings, not only on your original investments, but also on any interest, dividends, and capital gains that accumulate. That means that your "money makes money" and can grow faster over time.
How your savings could add up
While the annual IRA contribution limit of $6,000 may not seem like much, you can stack up significant savings.
Here's a hypothetical example: If you contribute $6,000 yearly and realize a 6% average annual return, at the end of 20 years, you could have $233,956 in your retirement account. (Note that this figure doesn't represent the return on any particular investment and the rate of return is not guaranteed.)
Vanguard's low costs add another dimension to your savings
The average Vanguard mutual fund expense ratio is 83% lower than the industry average.* The less you pay for your funds, the more you can keep in your pocket.
Over age 50?
Once you reach age 50, you qualify for an extra $1,000 IRA catch-up contribution. This means your annual limit jumps to $7,000, potentially adding more strength to the power of compounding and greater savings for you.
Still need help? Consider our advisor services
Ready to open an IRA?
New to Vanguard?
Already a Vanguard client? Log in and add open an IRA on your account.
Ready to open an IRA?
New to Vanguard?
Already a Vanguard client? Log in and add open an IRA on your account.
For more information about Vanguard funds or ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
*Vanguard average expense ratio: 0.09%. Industry average expense ratio: 0.54%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.
When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.