I Refuse to Keep All of My Retirement Savings in an IRA. Here’s Why

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Because I write about financial topics for a living, I’m well aware that I need to save pretty diligently for retirement. Social Security only pays the average retired worker about $23,000 a year today. And while I don’t have a problem with living frugally, I’m not sure I’d be able to live comfortably on that sum of money.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. For this reason, I’ve set up automated monthly contributions to a retirement account. A preset amount of money leaves my checking account at the start of the month and lands in my retirement savings plan without me having to manually move the funds over. This helps me stay on track.If you’re planning to save and invest for retirement, it pays to turn to an IRA, or individual retirement account. IRAs offer the benefit of tax-free contributions, which can make the process of saving that money much easier. Plus, with an IRA, you don’t pay taxes on capital gains year after year. You’re only taxed once you start to take withdrawals.I definitely recommend using an IRA to build a retirement nest egg. Click here for a list of the best IRAs for retirement savings.But I also don’t recommend keeping all of your retirement savings in an IRA. I have money in a regular brokerage account for retirement purposes as well, and I suggest you do the same for one big reason.When you want more flexibilityWhile the tax breaks that come with funding an IRA can’t be beat, one issue is that IRAs have a lot of rules. You have to leave your money in that account until age 59 1/2 or otherwise face a costly 10% penalty on withdrawals (though there are a few exceptions).Also, you can only contribute a certain amount of money each year, the exact amount of which can change over time. In both 2024 and 2025, the maximum allowable IRA contribution is $7,000 for savers under age 50, or $8,000 for those 50 and over.But what if you want to contribute more than that toward retirement? And what if you want to retire before the age of 59 1/2? If you’ve saved enough, you deserve that option without having to worry about being penalized for touching your own money.That’s why I’m keeping some of my retirement savings in a regular brokerage account. That account lets me contribute as much money as I want in a given year. And because I’m not getting any tax breaks from it, I can take withdrawals whenever I feel like it.Funnily enough, I don’t want to retire early. The idea of not working at all sounds unappealing since I tend to thrive on staying busy. But at the same time, I want to give myself the option to retire early if I’m in a position to do so. And an IRA alone won’t give me that.Look at the big pictureYou may not be able to contribute more than $7,000 or $8,000 toward retirement each year. But even if that’s the case, it still pays to consider housing some of your nest egg outside of an IRA so you can take withdrawals whenever you want.Remember, early retirement isn’t always something that happens on purpose. Some people are forced into it due to health issues or layoffs. So if you want to avoid financial stress in a scenario like that, make sure you have access to some money outside of an IRA.When you invest in a taxable brokerage account, you get the flexibility to do whatever you want with your money. You don’t even have to use it for retirement if another expense comes up that needs to take priority. So for these reasons, I strongly recommend that you open a brokerage account and use it alongside your IRA to set yourself up for a financially stable retirement.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Because I write about financial topics for a living, I’m well aware that I need to save pretty diligently for retirement. Social Security only pays the average retired worker about $23,000 a year today. And while I don’t have a problem with living frugally, I’m not sure I’d be able to live comfortably on that sum of money.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

For this reason, I’ve set up automated monthly contributions to a retirement account. A preset amount of money leaves my checking account at the start of the month and lands in my retirement savings plan without me having to manually move the funds over. This helps me stay on track.

If you’re planning to save and invest for retirement, it pays to turn to an IRA, or individual retirement account. IRAs offer the benefit of tax-free contributions, which can make the process of saving that money much easier. Plus, with an IRA, you don’t pay taxes on capital gains year after year. You’re only taxed once you start to take withdrawals.

I definitely recommend using an IRA to build a retirement nest egg. Click here for a list of the best IRAs for retirement savings.

But I also don’t recommend keeping all of your retirement savings in an IRA. I have money in a regular brokerage account for retirement purposes as well, and I suggest you do the same for one big reason.

When you want more flexibility

While the tax breaks that come with funding an IRA can’t be beat, one issue is that IRAs have a lot of rules. You have to leave your money in that account until age 59 1/2 or otherwise face a costly 10% penalty on withdrawals (though there are a few exceptions).

Also, you can only contribute a certain amount of money each year, the exact amount of which can change over time. In both 2024 and 2025, the maximum allowable IRA contribution is $7,000 for savers under age 50, or $8,000 for those 50 and over.

But what if you want to contribute more than that toward retirement? And what if you want to retire before the age of 59 1/2? If you’ve saved enough, you deserve that option without having to worry about being penalized for touching your own money.

That’s why I’m keeping some of my retirement savings in a regular brokerage account. That account lets me contribute as much money as I want in a given year. And because I’m not getting any tax breaks from it, I can take withdrawals whenever I feel like it.

Funnily enough, I don’t want to retire early. The idea of not working at all sounds unappealing since I tend to thrive on staying busy. But at the same time, I want to give myself the option to retire early if I’m in a position to do so. And an IRA alone won’t give me that.

Look at the big picture

You may not be able to contribute more than $7,000 or $8,000 toward retirement each year. But even if that’s the case, it still pays to consider housing some of your nest egg outside of an IRA so you can take withdrawals whenever you want.

Remember, early retirement isn’t always something that happens on purpose. Some people are forced into it due to health issues or layoffs. So if you want to avoid financial stress in a scenario like that, make sure you have access to some money outside of an IRA.

When you invest in a taxable brokerage account, you get the flexibility to do whatever you want with your money. You don’t even have to use it for retirement if another expense comes up that needs to take priority. So for these reasons, I strongly recommend that you open a brokerage account and use it alongside your IRA to set yourself up for a financially stable retirement.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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