The top 5 benefits of a Locked In Retirement Account (LIRA)
A Locked In Retirement Account (LIRA) is a type of savings account designed to hold and manage retirement savings that have been transferred from a defined benefit pension plan.
There are several benefits to holding a LIRA, including:
Protection of retirement savings: A LIRA protects retirement savings by locking in the funds and preventing them from being withdrawn or accessed until the individual reaches a specific age, typically 55 or 65. This can help to ensure that the savings are available for retirement and are not depleted before the individual is ready to retire.
Tax-deferred growth: The funds in a LIRA grow tax-deferred, which means that the individual does not have to pay taxes on any investment earnings until the funds are withdrawn. This can help the funds to grow faster, and can result in a larger retirement nest egg.
Flexibility in investment options: A LIRA typically offers a variety of investment options, such as stocks, bonds, and mutual funds. This allows the individual to choose investments that align with their risk tolerance and financial goals.
Potential for government contributions: In some cases, the government may provide matching contributions to a LIRA, which can help the individual's savings to grow faster.
Professional management of investments: A LIRA is typically managed by a professional investment manager, who can help the individual to select appropriate investments and manage the portfolio to maximize returns. This can provide peace of mind and can help the individual to achieve their retirement savings goals.
In conclusion, a LIRA offers several benefits to individuals who are holding and managing retirement savings that have been transferred from a defined benefit pension plan.
These benefits can help to protect the individual's retirement savings, provide tax-deferred growth, and offer flexibility in investment options.