How to Build a Million-Dollar Roth IRA If You Start Investing in 2024

Racking up $1 million in a Roth IRA might seem farfetched if you're just getting started. After all, the Roth IRA contribution limits were $6,000 in 2019, increased to $6,500 in 2023, and sit at $7,000 in 2024 for those under 50. However, joining the millionaire club is still possible, even with these relatively low contribution limits, thanks to the power of compounding and consistency.Person staring at computer and looking thoughtful.

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Maximize Roth IRA contributions

Roth IRAs receive a lot of attention because they allow you to contribute after-tax dollars now in exchange for tax-free withdrawals in retirement. So, if you amass a million dollars in your Roth IRA, it will be 100% tax-free as long as you're 59 1/2 and have satisfied the five-year rule.

To get the ball rolling, you need to contribute as much as possible to a Roth IRA if you qualify. For 2024, you can contribute up to $7,000 to an individual retirement account (IRA) if you're under 50 and up to $8,000 if you're older. You have until April 15, 2025, to contribute to a Roth IRA for 2024, so you can use cash from a year-end bonus or any other windfall to help you reach your goal.

If maxing out your Roth IRA sounds like a stretch this year, here are some tips to consider:

  • Trim unnecessary expenses
  • Contribute a small amount to your Roth IRA every week or month
  • Set up recurring contributions
  • Pick up a side gig to fund your Roth IRA, but make sure your income doesn't exceed the limits

The more money you can contribute to a Roth IRA, the better a chance you'll have of reaching your million-dollar retirement goal.

Put your contributions to work

While the contribution limits for IRAs are relatively low compared to other accounts, you can still have a shot at building a million-dollar IRA if you invest wisely. Unlike a 401(k), a Roth IRA gives you the flexibility to invest in all types of assets, including exchange-traded funds and individual stocks. You could even consider a self-directed Roth IRA if you're looking to supercharge your retirement portfolio with alternative investments. However, whatever you invest in, it's important to do your research and due diligence to ensure your investments align with your goals.

Let's say you are 30 years old and you meet the income requirements to contribute $7,000 to a Roth IRA in 2024. This could grow to about $197,000 by the time you turn 60, assuming the market continues to compound at its historical long-run return rate of around 10% annually. However, if you commit to contributing $7,000 per year, it would take just over 28 years to reach $1,000,000, assuming the same annual return.

Essentially, you'll want to save and invest as much as you can every year to increase your chances of building a million-dollar Roth IRA. Keep in mind that investment returns are not guaranteed and can vary widely from one year to the next, so it's important to maintain a long-term outlook.

The table below breaks down how your money could grow over time if you started investing this year.

GROWING AT 10% FOR

$7,000 INVESTED ANNUALLY

5 years

$47,009

10 years

$122,718

15 years

$244,648

20 years

$441,017

25 years

$757,272

30 years

$1,266,604

35 years

$2,086,888

40 years

$3,407,963

Data source: Author.

Your 2024 million-dollar Roth IRA game plan

When you break down the numbers, building a million-dollar Roth IRA is simpler than you might think. You could amass a million-dollar Roth IRA within a few decades if you contribute to your IRA every year. You might even reach your goal sooner if you max out your Roth IRA contributions annually and take advantage of the catch-up contributions when you turn 50.

The key to making this work is to get started. By maximizing your contributions in 2024, you can set yourself up to live the retirement you've dreamed of.

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