Almost 8 in 10 Americans Are Missing Out on This Incredible Retirement Savings Plan

It's important to save for retirement so you have funds to cover your living expenses once your career comes to an end. And different accounts can help you meet your long-term savings goals.

Some people like traditional IRAs and 401(k)s because these accounts give you a tax break on the money you put in. Roth IRAs, on the other hand, do not offer an immediate tax break. But the benefits they come with make them worth funding.

A recent CNBC survey, however, found that only 18% of Americans contribute to a Roth IRA. So if you're among the almost 8 in 10 Americans who don't have a Roth IRA, you should know that you're missing out big time.

Roth IRAs offer a world of benefits

The money you put into your retirement savings shouldn't sit in cash. Rather, it should be invested so it grows into a larger sum over time.

With a Roth IRA, investment gains in your account are tax-free. So let's say you contribute a total of $100,000 to your Roth IRA over many years, but through shrewd investments, your balance grows to $500,000. With a traditional IRA, you'd have to pay taxes on your $400,000 in gains. But with a Roth IRA, that $400,000 is all yours, free and clear of taxes.

Roth IRA withdrawals are also tax-free. That's important, because money can get tight for a lot of people in retirement. If you don't have to pay taxes on a large chunk of your retirement income, it gives you that much more flexibility and eliminates stress.

Plus, unlike traditional IRAs, Roth IRAs do not force savers to take required minimum distributions. These distributions effectively force savers to spend down their nest eggs rather than pass that money on to future generations.

Now, if you need the money in your retirement plan to live on, those required distributions aren't necessarily a problem. But if you want the option to leave some of your retirement savings to your heirs, then it pays to keep your money in a Roth IRA.

A higher income doesn't have to stop you from contributing

One thing that may be getting in your way of funding a Roth IRA is having a higher income, since there are earnings-related limits for making contributions. You're barred from making Roth IRA contributions if you have an adjusted gross income of over $153,000 as a single tax-filer or

$218,000 as a married joint tax-filer.

But you should know that you're allowed to put money into a traditional IRA and then convert it to a Roth IRA afterward (known as a backdoor Roth IRA strategy). You'll pay taxes on the sum you convert if those funds haven't been taxed yet, so you'll need to plan for that. But that way, you can still enjoy all of the benefits Roth IRAs have to offer.

It's important to save for retirement consistently, and you may be happy with your current savings plan. But if your current plan isn't a Roth IRA, it pays to at least consider opening one of these accounts.