Starting a Roth IRA Earlier Compounds Into Hundreds of Thousands. Here's Why — and How to Open One.
Bottom line
A decade of extra growth on a Roth IRA can mean the difference between $1.1 million and $612,000 at retirement.
In this guide
What it is
A Roth IRA (Individual Retirement Account) is a special savings account where you put in money you've already paid taxes on, and everything it grows into is yours at retirement. completely tax free.
By the numbers
If you put $200 a month into a Roth IRA starting at 22, earning an average 7% annual return, you'd have roughly $1.1 million by age 67. Start at 32 instead, and that same $200 a month grows to about $612,000. a $488,000 difference for just 10 years of waiting.
How it works
You deposit money into the account, then invest that money in things like index funds (baskets of stocks that track the overall market). Those investments grow over decades, and when you withdraw the money after age 59½, you owe zero taxes on any of it. not even on the gains.
The catch
A lot of people open a Roth IRA but forget to actually invest the money inside it. Just depositing cash into the account does nothing. it sits there like a savings account earning almost no interest until you choose investments inside it.
What to check next
Open a Roth IRA through any online brokerage this week, deposit any amount, and immediately select a target date retirement fund to invest it in.
Your next step
Now put it into practice with your own numbers.
Go deeper with your own numbers — tools, plain-English explanations, and a clear starting point for your specific situation.
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