This Is Suze Orman's Favorite Retirement Account

You may want to put your money there. 

Saving for retirement is essential. Without personal savings, you might struggle financially later in life. 

But it's important to find the right home for your retirement savings, especially since you have different options. You can open an IRA account as long as you have earned income. And from there, you can opt for a traditional IRA or a Roth IRA. 

In a recent podcast episode, financial guru Suze Orman called the Roth IRA "my favorite type of retirement account." And here's why it could end up being the best home for your money.

Tax-free withdrawals could come in handy during retirement

The money you put into a traditional IRA will serve as a near-term tax break. Contribute $3,000 to one of these accounts this year, and that's $3,000 of income the IRS won't tax you on. Only once the time comes to start withdrawing from your IRA, you'll be forced to pay taxes on your distributions, which means you'll need to deal with that headache during retirement.

With a Roth IRA, taxes on withdrawals won't come into play. Now, you will give up your immediate tax break with a Roth IRA. But during retirement, when money may be tighter than it is during your working years, the money you remove from your savings will be yours to keep in full. There's a lot of value in that.

Also, we don't know what tax rates will look like in the future. If you save for retirement in a Roth IRA, you won't have to worry about future tax hikes across the board. That's because you won't be paying taxes on the money you take out of your account.

More flexibility with your money

Most retirement accounts force you to remove a portion of your savings every year in the form of required minimum distributions. Roth IRAs don't have these. And that's a really good thing.

Even though there's a strong chance you'll need to take yearly withdrawals from your retirement account once you stop working, what if you have a year when you decide to work part-time, and therefore don't have to tap your savings? Or what if you get an inheritance one year that covers your expenses in full? With a Roth IRA, you can leave your money alone and let it grow during that time rather than be forced to remove a chunk of cash.

Also, while your goal of funding your retirement plan may be to support yourself as a senior and avoid financial stress, you might really want to leave some of that money behind to your heirs. Since Roth IRAs don’t mandate that you take required minimum distributions, that will be an option you can explore if your finances allow for it.

You can bet that if Suze Orman is going to play favorites in the context of retirement savings accounts, there's going to be a good reason for it. So it pays to consider keeping your long-term savings in a Roth IRA.