Acorns Later review quick take: A retirement account that helps you invest in Roth IRAs, traditional IRAs, and SEP IRAs.
What is Acorns Later?
Acorns Later allows you to automatically invest for retirement with some potential tax benefits. With Later, you get an IRA plan recommendation based on your long-term goals. It’s managed for you through a robo-advisor.
Save for retirement with Acorns IRA options, including Roth, traditional, and SEP. With as little as $5, you can turn your acorn into a mighty oak.
Open your Acorns Later IRA account in 2 minutes.
What’s an IRA?
IRA stands for Individual Retirement Arrangement, a tax-advantaged account with annual contribution limits set by the IRS.
There are 3 types of Acorns IRAs:
- Traditional IRA – earnings can potentially grow tax-deferred until you withdraw them in retirement.
- Roth IRA – you make contributions using after-tax dollars. You can contribute up to a certain amount each year. Earnings grow tax-free.
- SEP IRA – a Simplified Employee Pension (SEP) plan allows self-employed and business owners to contribute to their retirement savings.
Why Invest in an IRA?
IRAs can help you invest for retirement with potential tax advantages. Tax-advantaged accounts, like IRAs, are a type of retirement savings plan that offers tax benefits such as tax exemption or tax deferral.
- Benefit from tax advantages. Depending on the IRA, you can save taxes now with a deduction or save later with a tax-free withdrawal.
- Grow your investment account with income from interest, dividends, and capital gains.
Learn more about traditional and Roth IRAs.
How Acorns Later IRA Works
Start by answering a few questions. Depending on your income, employment, lifestyle, and goals, Acorns will automatically suggest the right IRA for your situation and risk tolerance. Your Acorns IRA portfolio may contain low-cost exchange-traded funds (ETFs), individual stocks, fractional shares, and bonds.
With Later, you can add to your retirement savings one-time or through recurring contributions (that take place daily, weekly, and monthly).
With Acorns Later, you can contact support via AI chat.
Key Features
Acorns retirement accounts include the following:
- Minimum Amount: $0 to open an account, but you will need $5 to start investing.
- Later Match: Get a 1-3% match on your IRA contributions (launching in July 2024).
- Automatic contributions: set up recurring investments.
- Security & Protection: Later accounts are SIPC insured up to $500,000 but do not protect against market risks.
- Robo-advisor: your IRAs are managed and optimized based on your age and the time until you reach “retirement age,” which is currently 59 ½ years old, according to the SSA. The algorithms automatically rebalance your investments over time.
- Diversified portfolio: investing strategies include exchange-traded funds (ETFs) with six asset classes: large, mid-and small-cap companies, emerging markets, government bonds, corporate bonds,
Pricing
To access Acorns Later, you’ll need a subscription. There are three tiers.
- Personal: $3 per month. All-in-one investment, retirement, and checking, plus a metal debit card, bonus investments, investment advice, and more.
- Personal Plus: $5 per month. It offers everything included in Personal, plus higher yields in checking and emergency fund savings and a 25% match on bonus investments.
- Family: $9 per month. Get everything mentioned in Plus, along with a 50% match on bonus investments, access to GoHenry (a debit card made just for kids), $10,000 life insurance for qualified users, and a no-cost will to plan for your family’s future.
Fees
Acorns Later charges a flat management fee. There are expense ratios of the funds used in Acorn’s portfolios.
Pros and Cons
Pros
- Automatically invest daily, weekly, or monthly
- Risk-appropriate, low-cost ETFs
- Potential tax benefits
Cons
- No access to financial advisors
- No tax strategy
- Unable to invest in individual stocks
Who is it best for?
Acorns IRAs are best for new investors who desire automatic investing and simplicity with their retirement accounts.
Acorns IRA Review
Acorns is a legit company and its Later IRAs are a good investment option. In our Acorns review, we learned how it can help meet your retirement investment goals through robo-advising and automatic contributions. Acorns Later is good for hands-off investors who don’t want to think about expense ratios or risk levels.
In our review of Acorns Later, the app is rated high, 4.7 out of 5 stars in the App Store with over 700k reviews. However, customers on Trustpilot have given it a poor average rating.
Acorns Later is not a scam. The retirement accounts offered can help you achieve your retirement goals with no fuss. Getting started is easy. Just answer a set of questions and get a recommendation based on your personal goals and time horizon.
Now, it’s important to understand that all IRA accounts are regulated, whether you have them with Acorns or another brokerage. There are tax implications. Withdrawing money before retirement age can result in taxes, early withdrawal fees, and penalties assessed by the IRS.
To open an IRA, you must have an Acorns Invest account. Additional services offered to account holders include custodial accounts and banking services.
How to Start Using Acorns Later
The time needed: 2 minutes.
Step-by-step to open an Acorns IRA
- Getting started
Log in to your account or click on the link. - Open an IRA account
Complete the signup process by answering questions.
Acorns IRA Alternatives
There are Acorn IRA alternatives offered by Webull IRA, M1 Finance IRA, Stash IRA and more.
Acorns Later FAQ
How much do you need to retire comfortably?
Whether you decide to retire later or retire early, using a retirement calculator can help you plan your investment strategy. Using a retirement calculator can help you determine how much money you’ll need in retirement. Read more on calculating your retirement using the financial independence number calculation.
Can I withdraw from my Acorns Later account?
You are allowed to make early withdrawals, but there are tax implications for doing so, including possible income taxes, a 10% early withdrawal penalty, and other fees. The IRS website provides more information about the taxes and penalties.
Can I rollover my existing IRA or old 401(k) into Acorns?
With Acorns Later, you can also transfer and roll over existing retirement plans and potentially save on management fees.
- Transfer an IRA: transfer your existing IRAs from other brokerages into an Acorns Later.
- Roll Over a 401(k): started a new job? Submit a request to roll over your previous employer-sponsored plan.
by Jason Vitug
Acorns Later Review: Is it worth it?
I’ve used Acorns Later when it first came out just to test the features. It’s simple to get started and contribute. If you’re familiar with Acorns, then you know your money is invested within their suite of ETFs. Currently, I am not using Acorns Later as I’ve chosen to invest passively using other funds in a different brokerage account.
Like many other retirement accounts available, you can contribute one-time or multiple times through the IRS governed contribute timeline for each year.
I do recommend Acorns Later for anyone struggling to save money. I say this because the fundamental Acorns product Invest has done well for many who needed a way to invest small amounts of money using the Round-up feature. Now, if you’re looking to save for your retirement, and everyone should, then consider adding Later.
Is the $3 per month fee worth it? It actually depends on your balances. Let’s say for instance you have $100 saved and spending $3/month, that’s $24 per year. You’re losing money. But as your balances continue to grow (and it should) you benefit by having a flat rate payment as opposed to a percentage fee tied to your balance.
One thing to note, there are other options available for retirement accounts but Acorns simplicity might be what you need to get started. And maybe once you do you’ll come to discover other ways to invest for your retirement.