Bill Donoghue at MarketWatch wrote “You will never retire on the money you save for retirement; you will retire on the money you make on the money you save for retirement.” This bit of advice goes hand in hand with suggestion offered to a former girlfriend at a lecture she attended about post college finances. The lecturer, she recounted, said the most important thing to do was to try and contribute as much as possible towards an IRA every year. Intrigued, I set out to do some research on IRA’s and, not surprisingly, the man who was being paid to teach college kids a thing or too about managing money had a good idea.

IRAs, or Individual Retirement Accounts, are pretty much what they sound like: they’re accounts set up by you to fund your retirement. There are a couple different types and they each serve different purposes but the most common are Traditional and Roth IRAs. Traditional IRAs are tax-deductible, and Roth IRA deposits are made after taxes, meaning there is no tax on the money when it is withdrawn (unless it’s withdrawn before its maturity date). Kiplinger’s article on the benefits of a Roth IRA also provides an IRA calculator, allowing you to calculate your return on a Roth IRA versus a savings account.

Admittedly, IRAs are a bit of a tricky thing to write about, being decades away from actually being able to use the funds invested in them. However, like the emergency fund, knowing that I will have a source of income to fund the things I wish to do later in life is certainly reassuring. But with plenty of more experienced savers advocating IRAs, not to mention the additional years of interest to be added, setting up an IRA is definitely not something to wait around for. Finally, everyone’s financial situation is different so, if possible, consulting your local bank (even if you ultimately decide to open your IRA online) can help you set up a system for establishing and paying into an IRA.