As the new year begins, you’re probably thinking about financial goals you want to tackle in 2025. While you’re at it, why not think long-term and add retirement planning to the mix? If you can carve out room to contribute to an individual retirement account — like the coveted Roth IRA — your future self will thank you.

Here’s why: Roth IRAs are a favorite for many retirement savers. If you’re in a lower tax bracket now than you expect to be later, contributing after-tax dollars to a Roth IRA today makes a lot of sense. In return, you’ll enjoy tax-free income and gains once you hit age 59 1/2 and meet the five-year rule.

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Over time, if you keep investing and contributing, you might even have a shot at a million-dollar Roth IRA. Ready to start in 2025? Let’s break down the steps to get you there.

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Create a Roth IRA contribution plan

The first step is to open a Roth IRA and start making direct contributions if you’re eligible. For 2025, the contribution limit is holding steady at $7,000 if you’re under 50, with an extra $1,000 catch-up contribution if you’re 50 or older.

Contributing the max might feel like a stretch if you’re just starting out — and that’s totally understandable. Set a realistic target for now and aim to increase it in future years. But if you’re ready to go all-in this year, here are a few tips to make it easier:

• Break your goals down: Divide your annual contribution goal into smaller, manageable chunks. For instance, aim to contribute around $583 per month or about $135 per week to hit the $7,000 limit by the end of the year.
• Automate your success: Set up recurring transfers from your checking account to your Roth IRA. With this “set it and forget it” move, you’ll be growing your retirement savings without even thinking about it.
• Trim unnecessary expenses: Review your debit and credit card statements to identify where your money is going. Cancel unused subscriptions or cut back on non-essential spending, and redirect those savings to your Roth IRA.
• Make use of windfalls: Consider socking away bonuses, tax refunds, or other unexpected cash toward your Roth IRA to give your savings a boost without straining your budget.
• Pick up a side hustle: Use extra income from a side gig to supercharge your retirement savings. Whether it’s gig economy work or selling a product or service, funnel those funds directly into your Roth IRA. With an additional $1,000 per month, you could max out your contributions and still have cash left for other goals.

Turn your contributions into investments

Making annual contributions to a Roth IRA is a great start. However, you’ll need to do more to have a shot at a million-dollar Roth IRA. Here’s why: Even if you diligently contributed $7,000 a year for 50 years, you’d only have $350,000 saved. While that’s a nice chunk of change, it’s far from the potential wealth you could build by putting your money to work by investing.

Investing your Roth IRA dollars lets you tap into the magic of compound interest. That’s when your money starts earning returns on its returns, helping it grow exponentially over time.

Here’s a table showing how much your contributions could grow at annual returns ranging from 8% to 12%. Historically, S&P 500 index funds have delivered an average annualized return of around 10% over the long term:

Calculations by author.

Get started on your million-dollar Roth IRA

Keep in mind that market returns aren’t guaranteed — some years may be up, and others down. Your results will depend on what you invest in, whether it’s growth stocks, exchange-traded funds (ETFs), or other assets. Keep a long-term perspective, do your research, and aim for a well-diversified portfolio.

Even if your Roth IRA doesn’t hit seven figures, you can still build a million-dollar retirement by contributing to other accounts, like a 401(k) or taxable brokerage. The key is starting today and committing to growth. The good news is that you have until the tax filing deadline, around April 15, 2026, to contribute for 2025. With consistency and strategic planning, you’ll be on your way to the retirement you’ve dreamed of.

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