3 big reasons to open a gold IRA today

Planning for retirement is one of the most important parts of your financial plan. No matter what age you are, it is not too early to start thinking about your golden years — because if you don't, you could want to stop working but be unable to afford it. 

There are many ways to save for your eventual retirement, from a workplace retirement plan like a 401(k) to putting money into a high-yield savings account. One way to save that some people might not immediately think of, though, is by investing in gold. 

A gold IRA is designed to invest in gold for the purpose of saving for retirement. And, there are a few reasons in particular why opening a gold IRA is a good idea right now.

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4 big reasons to open a gold IRA today

Opening a gold IRA can be a major boon to your retirement plan. Here are four reasons why:

Gold is a hedge against inflation

No matter how much money you put away, if inflation increases significantly, you could be left with a fraction of the purchasing power you had when you started. Gold, though, can protect your finances against losses due to inflation.

The price of gold tends to fluctuate with the rest of the economy, so if inflation goes up, the price of gold tends to increase in turn. This means that when you eventually sell the gold in your portfolio and take cash dispersals in retirement, you generally aren't looking at growth that has been outpaced by inflation. This isn't necessarily true for other retirement investments, like stocks.

Inflation has been particularly high the past few years, and while it has started to slow down, there will likely be other inflationary moments in the years before you retire. Having some of your retirement savings in a gold IRA can help inure you from the impacts of that.

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Gold is less risky than some other investments

When you purchase stocks, you're buying a small piece of a company and betting on the value of the company to increase over time. Sometimes it works out great — as anyone who bought Apple shares in the 1990s and held onto them for a while can attest to. There's always the chance, though, that the stock loses value or even that the company folds and your investment is worth nothing.

Gold, on the other hand, has an intrinsic value. It's one of the oldest investments on earth, and barring a legitimate global catastrophe, gold will always have some value.

While putting all of your retirements in gold would probably be a bad idea — gold also doesn't have the potential upside that other investment options carry — having a portion of your retirement savings there means that even if there is a market crash or financial crisis, you'll have some value left.

Gold IRAs have tax benefits

You could, of course, simply buy gold bars or coins and store them in a safe deposit box rather than investing in gold via an IRA. Using an IRA, though, gives you tax advantages just like you would get if you used a regular IRA.

The money you invest via a gold IRA is put in before taxes are applied. This means you don't initially pay income tax on a portion of your money, potentially saving you some cash down the line. You will eventually pay income tax based on your income tax rate at the time of withdrawal when you take dispersals down the line, but you'll likely be in a lower tax bracket in retirement than you are now. 

Also, if you invested in physical gold outside of an IRA, you'd have to pay both income tax now and capital gains tax when you eventually sell the gold.

The bottom line

A gold IRA can be a great addition to your retirement savings portfolios. It gives you the big advantages of investing in gold — a stable investment that acts as a hedge against inflation — with the tax advantages of an IRA, namely being able to invest money before taxes rather than having to pay income tax now and capital gains tax in the future. While investing all of your money in gold likely wouldn't make sense, putting a portion of your retirement savings in a gold IRA can be a good bet.