Individual Retirement Account (IRA) An Individual Retirement Account allows individuals who are earning income to contribute to a tax-deferred investment. An individual can contribute up to $2,000 per year or $4,000 if married to an unemployed spouse. Contributions to an IRA are tax-deductible based on the individualís marriage status and income level. Monies contributed to an IRA may be invested in stocks, bonds, mutual funds, annuities, bank savings accounts, Certificates of Deposit, government bonds, and investment trusts but not more personal and immediate investments such as a home or collectibles. The individual may contribute to the IRA account until age 70 1/2, but if money is withdrawn before age 59 1/2, penalties may be incurred.
Inflation Risk Inflation risk is the possibility that the value of assets or income will decrease as inflation reduces the purchasing power of money. Inflation causes money to decrease in value at some rate, and does so whether the money is invested or not.