Saving for retirement doesn’t have to be confusing. A Roth IRA is a special savings account that lets your money grow tax-free. You pay taxes on the money you put in now, and you won’t owe taxes when you take it out later.
What Is a Roth IRA?
A Roth IRA is an Individual Retirement Account that uses after-tax dollars. “After-tax dollars” means you’ve already paid income tax on the money you contribute. Because you pay taxes upfront, withdrawals in retirement are tax-free.
Tax Benefits That Matter
With a Roth IRA, you won’t pay taxes on earnings or withdrawals after age 59½. “Earnings” are the extra money your investments make over time. This benefit helps your savings grow faster because you keep more of what you earn.
Who Can Open a Roth IRA?
To open a Roth IRA, you must have earned income and stay under income limits set by the IRS. Most people can contribute up to $6,500 per year, or $7,500 if you’re 50 or older, as of 2024.
Tips to Maximize Your Roth IRA
Start early and contribute each year to take advantage of compound growth. “Compound growth” means earnings build on past earnings. If you can, contribute the maximum each year and review your investments for a good mix of stocks and bonds.
Crystal L. Gunn is a Financial Healer, Licensed Life Insurance Producer, and founder of the Financial Wisdom Institute, the Archer Wealth Group, and the Amazing Woman Network. She helps individuals and communities heal their relationship with money through a liberatory, ancestral, and somatic lens. Ready to discover which financial wound has been running your money? Visit financialwisdominstitute.com/liberation-tools
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