An individual retirement account (IRA) allows you to save money for retirement in a tax-advantaged way. ... Traditional IRA - You make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement.

Can you lose money in an IRA?

Yes, you can lose money in a Roth IRA. The most common causes of a loss include: negative market fluctuations, early withdrawal penalties, and an insufficient amount of time to compound. The good news is, the more time you allow a Roth IRA to grow, the less likely you are to lose money.

How does an IRA work in retirement?

A traditional IRA lets you defer taxes now and pay them when you withdraw the money for your retirement. If you suspect you'll be in a lower tax bracket in retirement, a traditional IRA can save you money in the long run, and includes some special penalty-free withdrawals for certain purchases.