3 Reasons to Make Your Roth IRA Maximum Contribution

Making your Roth IRA maximum contribution is something that you should focus on every single year. Here are a few reasons that you should make your Roth IRA maximum contribution.

1. Compound Interest

The power of compound interest is very important to remember when you are planning for retirement. If you put as much money as you can into the account early, it can compound to be a very large amount of money, over the the span of many working years,

2. Small Maximums

With a Roth IRA, you can not contribute much money each year overall. You can put a maximum of $5000 into your Roth IRA each year, unless you are over 50. When you think about it, this is not going to amount to much by the time you retire. If you contributed the maximum for 40 years, that is only $200,000 that you have contributed. While you will earn interest, it still may not be enough to retire with. 

3. Income Considerations

You need to get as much money into your Roth IRA as soon as possible because of income considerations as well. You can fully contribute to a Roth IRA if you make less than $105,000 as an individual or $166,000 as a couple. As you progress in your career, you might surpass that threshold and not be able to contribute any more. 

blog comments powered by Disqus