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🏖️ Retirement & Free Money · Lesson 3 of 10 · 7 min

The IRA: Your Own Account

🧰 No 401(k) at work? Tragic. Anyway — you can open your own retirement account faster than you can lose an argument with a self-checkout machine, and no boss has to be involved.

💡 Key idea

An IRA is your personal retirement account — no employer required.

🧠 Why it matters

An IRA (Individual Retirement Account) is a retirement account YOU open on your own at any major brokerage — no employer needed. It comes in Roth and Traditional flavors, just like a 401(k). The annual contribution limit is lower, but it's open to almost anyone with earned income, and you choose exactly how it's invested.

🌍 In the real world

💡 The classic pro order: contribute enough to your 401(k) to grab the full employer match, THEN funnel extra savings into a Roth IRA for its tax-free growth and flexibility. Match first, IRA second.

📌 Takeaways

  • An IRA is a retirement account you open yourself
  • Comes in Roth and Traditional versions
  • Great for extra savings after grabbing the 401(k) match

📖 Terms in this lesson

IRA: An individual retirement account you open yourself, with tax benefits, separate from any employer.

✅ Test yourself

What's the main difference between an IRA and a 401(k)?
  1. IRAs are illegal
  2. You open an IRA yourself; a 401(k) comes through your employer
  3. IRAs can't be invested
  4. There's no difference

Answer: B · You open an IRA yourself; a 401(k) comes through your employer

An IRA is your own account at a brokerage; a 401(k) is offered through your job, often with a match.

A common smart sequence is:
  1. IRA only, never a 401(k)
  2. Get the full 401(k) match first, then fund a Roth IRA
  3. Spend it all
  4. Wait until age 50

Answer: B · Get the full 401(k) match first, then fund a Roth IRA

Grab the free match first, then use the IRA for additional tax-advantaged saving.

Who can open an IRA?
  1. Only the unemployed
  2. Almost anyone with earned income
  3. Only millionaires
  4. Only big-company employees

Answer: B · Almost anyone with earned income

IRAs are widely available to anyone with earned income.

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