What's Happening
12 minutes ago

'Racism Has No Place in Missouri': State Attorney General Sues Starbucks Over Hiring Policies

benzingabenzinga.com
13 minutes ago

Geopolitics And Resource Nationalism Are Choking The Commodity Supply

benzingabenzinga.com
23 minutes ago

'Investors Seem To Remain Poised For A Good Year In The Markets' Even As Valuation Remains Elevated, Says Fidelity's Macro Chief

benzingabenzinga.com
26 minutes ago

SMCI Stock Jumps Nearly 7% In Wednesday Pre-Market After Company Says It Will Meet SEC Filing Deadline

benzingabenzinga.com
33 minutes ago

TRADEPULSE POWER INFLOW ALERT: BROADCOM (AVGO), RISES 2.1% AFTER ALERT FROM TRADEPULSE

benzingabenzinga.com
45 minutes ago

NASA Alters Timelines To Expedite Return Of Astronauts Sunita Williams, Butch Wilmore Stranded At Space Station For Over 8 Months

benzingabenzinga.com
56 minutes ago

Why Upstart Shares Are Trading Higher By Over 25%; Here Are 20 Stocks Moving Premarket

benzingabenzinga.com
1 hour ago

Marriott's Digital Penetration Hits 'Historic Highs' As Bonvoy App Downloads Soar Adding 31 Million New Members

benzingabenzinga.com
1 hour ago

Dow Gains Over 100 Points Following Powell Comments: Fear & Greed Index Remains In 'Neutral' Zone

benzingabenzinga.com
2 hours ago

Google I/O 2025 Officially Set For May — Here's What To Expect, From AI Breakthroughs To The Future Of Android And Pixel 9a

benzingabenzinga.com
2 hours ago

Mark Zuckerberg's Meta Eyes Acquisition Of Korean AI Chip Startup Founded By Former Samsung And AMD Engineer

benzingabenzinga.com
2 hours ago

Larry Summers And Peter Schiff Warn Of Rising Inflation Risks As Markets Slash Fed Rate Cut Expectations: 'Most Sensitive Moment'

benzingabenzinga.com
2 hours ago

Meta Stock Surges 17.47% In 17 Days, Marking One Of Its Longest Winning Streaks—Analysts Say There's Still Room For Double-Digit Growth For Mark Zuc...

benzingabenzinga.com
3 hours ago

This Is My Backup Plan in Case Social Security Cuts Benefits

retireretire.ly
3 hours ago

Earnings Scheduled For February 12, 2025

benzingabenzinga.com
3 hours ago

Biogen Gears Up For Q4 Print; Here Are The Recent Forecast Changes From Wall Street's Most Accurate Analysts

benzingabenzinga.com
3 hours ago

MKBHD Joins Guessing Game After Rivian Teases 'Mirage' Event For Feb. 19: What's Going On?

benzingabenzinga.com
3 hours ago

Mohamed El-Erian Says Trump's 'Uncooperative' Tariff Play Can Benefit America, But Could Lead To 'Welfare Losses' In Long-Term

benzingabenzinga.com
3 hours ago

Tesla Q1 Deliveries Could Drop Below 400,000 As Brand Sentiment Takes A Hit, Says Researcher

benzingabenzinga.com
3 hours ago

CVS Health, Kraft Heinz And 3 Stocks To Watch Heading Into Wednesday

benzingabenzinga.com

5 Secrets of Roth IRA Millionaires

For many, the Roth IRA is the best thing since sliced bread. And there’s one perk that always steals the spotlight: tax-free income during retirement. With a Roth IRA, you pay taxes upfront, and after you turn 59 1/2 and meet the five-year rule, all the money in your account is tax-free.

Sounds pretty great, right? Even if your account grows to over $1 million, you won’t have to share a dime with Uncle Sam. Of course, there are some trade-offs, like not getting a tax break now. But if becoming a Roth IRA millionaire has ever crossed your mind, here are five secrets you should know.

Parents teaching kid about saving money with a piggy bank.

Image source: Getty Images.

1. They don’t just wing it

It’s easy to say you want to retire a Roth IRA millionaire, but setting specific goals and sticking to them? That’s where the magic happens.

Whether it’s deciding how much to sock away each year or aiming for a target balance by a certain age, having clear goals keeps you focused and helps you make smarter money moves. Plus, when you know the number you’re aiming for, you can work backwards to figure out exactly what you need to do today to hit that goal.

2. They get a head start

One of the perks of a Roth IRA is that anyone with earned income can contribute — even your kid. If your child has a part-time job, you can open a custodial Roth IRA and both of you can pitch in up to the annual contribution limit. Keep in mind that the total contributions can’t exceed your child’s earned income. But don’t worry — time can still work in their favor to make it easier for them to build a million-dollar Roth IRA.

Let’s say your 15-year-old contributes $7,000 every year for 40 years. That’s $280,000 socked away, but here’s when it gets exciting. By investing and earning an average 8% return, that Roth IRA could grow to over $1.9 million before they hit retirement age.

3. They know how to manage their income

You don’t need to pull in a massive paycheck to become a Roth IRA millionaire. In fact, if you’re making too much, you won’t be allowed to make direct contributions to a Roth IRA. It’s important to keep an eye on the annual income limits each year to make sure you still qualify — or consider using a Backdoor Roth IRA if you don’t.

All told, contributing to your Roth IRA isn’t just about how much you make. What’s even more important is how much you’re able to set aside to save and invest. The good news? You could save a bigger chunk of your paycheck by making a few moves, including:

  • Develop a budget
  • Avoid lifestyle creep
  • Pay off credit card debt
  • Build a solid emergency fund

4. They understand the power of compounding

Saving $7,000 a year for 10 years would give you $70,000. Not too shabby, but we can definitely do better. If you invest that $7,000 annually and earn a 12% return, you could almost double your money. That’s the magic of compounding in action. It’s when the money your investments make starts earning even more money.

Let’s take a look at how your savings could grow every 10 years if you contribute $7,000 annually and earn a 10% or 12% return. Keep in mind that investment returns aren’t guaranteed, but patience and sticking to high-qualify investments can pay off in the long run.

$7,000 Invested Annually For:

Growing at 10%

Growing at 12%

10 years

$122,718

$137,582

20 years

$441,017

564,891

30 years

$1,266,604

$1,892,048

40 years

$3,407,963

$6,013,997

Data source: Author calculations.

5. They don’t get bored doing the same thing over and over

The path to becoming a Roth IRA millionaire can seem pretty uneventful. Every year, you contribute as much as possible up to the annual limit. In 2024, that means tucking away up to $7,000 if you’re under 50, and $8,000 if you’re older. Then you invest the money.

Sure, you’ll need to figure out how to maximize those contributions and make smart investment choices, but beyond that, it’s all about consistency. Boring? Maybe. However, it’s still pretty exciting to know that by starting now, you’re laying the foundation for a comfortable life in retirement.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

Okay, folks. It’s time to get serious about Social Security. I don’t like to be the person who sounds alarms and causes unnecessary panic. But

Image source: Getty Images The best credit cards have a lot of perks — cash back, travel rewards, purchase protection, and more. But what happens

Social Security benefits for spouses are a common source of confusion. MassMutual reports that 25% of surveyed adults near retirement age were unaware that spouses

Image source: Getty Images Most people pay their credit card bill once a month, but you’re allowed to pay more frequently. Technically you can pay