Millions of Americans invest in Individual Retirement Accounts (IRAs)—and with good reason.

An IRA is a great way to save for retirement, and it’s available to anyone with earned income. Yet, many people don’t fully fund their IRAs each year. That could be a costly mistake—so do whatever you can to avoid it.

Before we get to the funding issue, let’s examine the key benefits of an IRA:

 Tax advantages—When you invest in a traditional IRA, your earnings can potentially grow on a tax-deferred basis, which means your money can grow faster than if it were placed in an investment on which you pay taxes every year. And depending on your income level, some of your contributions may be tax deductible. If you have a Roth IRA, your contributions aren’t deductible, but your earnings can potentially grow totally tax-free, provided you’ve had your account for at least five years and you don’t start taking withdrawals until you reach 59-1/2.

 Wide choice of investments—You can fund your traditional or Roth IRA with just about any investment vehicle available, including stocks, bonds, certificates of deposit and Treasury bills. You can even choose an investment mix that reflects your long-term goals, risk tolerance and time horizon.

Clearly, it’s a smart move to contribute the full amount to your IRA every year. So, why don’t more people do it?

One reason is that many investors may become intimidated by the IRA’s contribution limits. You could invest up to $5,000 to your IRA for the 2009 tax year and for 2010, or $6,000 if you’re 50 or older.

These limits can look imposing, especially if you think you have to pay the money all at once—and pay it around tax time.

Of course, if you can afford to fund your IRA all at once, it may be to your advantage to do so, because the earlier in the year you have your IRA funded, the more time it has to potentially grow. But if you can’t write a check for $5,000 in January, why not divide the amount into 12 monthly payments of $416? That amount may also pose a challenge to your monthly cash flow, but it’s probably far more manageable than writing that big one-time check.

Making regular investments into your IRA may also offer “strategic” advantages. While your monthly payments can’t guarantee a profit or protect against a loss in a declining market, they may be able to help you overcome some of the volatility of the financial markets.

How?

Suppose your $416 monthly IRA investment goes to buy stocks. When stock prices are low, that $416 will buy more shares, and when prices are high, it will buy fewer shares.

Be sure that you consider your ability to continue investing through periods of low price levels.

If you haven’t fully funded your IRA for 2009, you’ve got until the tax-filing deadline, which is April 15. After that, if you’ve got the money to fund your IRA for 2010, do it as soon as you can, or do it throughout the year. Just get it done.

Someday, you may be glad you did.