A young woman and a dog are in a car.
Retirement

What is an IRA? Here's the gist

With an IRA, you get a practical way to start or supplement your retirement savings. And it comes with tax breaks to boot.
2 minute read

The basic definition

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.

 

What it does

It provides an excellent opportunity for your retirement money to grow and compound faster than it would in a taxable account.

 

What you can do

You can open an IRA on your own through almost any bank, brokerage company, insurance firm, or investment company.

And you can save your way for your retirement through the wide variety of investment choices that an IRA offers.

For example, at Vanguard, you can choose from our broad range of low-cost mutual funds and exchange-traded funds (ETFs), as well as individual stocks and bonds and funds from other companies.

Learn more about the benefits of an IRA

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.

We're here to help

Have questions? Contact us

Open your IRA today

Get started

Open your IRA today

Get started

All investing is subject to risk, including the possible loss of the money you invest.

When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.

For more information about Vanguard mutual funds or Vanguard ETFs, obtain a mutual fund or an ETF prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free online) or through another broker (who may charge commissions). See the Vanguard Brokerage Services Commission and Fee Schedules for limits. Vanguard ETF Shares are not redeemable directly with the issuing Fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.