Q&A: Roth IRAs

Written By Emily + Cassidy

The name “Roth IRA” doesn’t scream excitement. (It kinda sounds like a stuffy account you’d open in the 1950s.) But fun fact: Roth IRAs just became a thing in 1998, which is why even older generations are still getting excited about them.

If you’ve been seeing everyone online shouting “Max out your Roth IRA!” and you’re like, Okay, but why?? — this episode is for you.

Today, we’re answering your listener-submitted questions about how Roth IRAs work, who should open one, and how to actually invest the money inside. 

Plus, we chat about whether now is a good time to invest (spoiler alert: it probably is).

📌 Time stamps & questions answered:

[00:00:00] - Intro & why we love Roth IRAs
[00:02:00] - Emily’s aunt gave the most iconic Roth IRA pep talk
[00:04:00] - What is a Roth IRA? Explain it to me like I’m 5.
[00:07:00] - Who should open a Roth IRA?
[00:09:00] - Where can I open a Roth IRA?
[00:11:00] - Is it a good idea to keep my emergency fund in a Roth IRA?
[00:13:00] - When should I start being more conservative with my Roth IRA investments?
[00:15:00] - I have both a Traditional IRA and a Roth IRA—where should I put my money?
[00:19:00] - I opened a Roth IRA… now how do I actually invest the money inside it?
[00:23:00] - What are the tax benefits of a Roth IRA vs. a Traditional IRA for freelancers?
[00:25:00] - Should I still be investing money right now when everything feels chaotic?
[00:32:00] - Final thoughts & how much your Roth IRA could be worth in retirement

📌 Resources & links:

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Transcript

[00:00:00] 

Cassidy: Welcome back. Today we’re answering your questions about one of the most talked about and honestly kind of coolest retirement accounts out there, [00:01:00] and that is the Roth IRA. Uh, we know the name Roth IRA does not necessarily scream excitement. It kind of sounds like a stuffy, old bank account you would open in the 1950s. But, fun fact. Roth IRAs are actually super new in the world of investing. They first became a thing in 1998. Which is why even older generations are still getting pretty excited about them. So, if you have been seeing everyone shout online, “max out your Roth IRA,” and you're like, okay, but why, then this episode is for you. 

Today we are answering your listener-submitted questions about how to use a Roth IRA, when to open one, and why people won't stop talking about them. But before we dive into our listener-submitted questions, I'm going to put Emily on the spot a little bit, because while we were planning out this episode, she told me this adorable story about this aunt who introduced her to Roth IRAs.

And I want her to tell the [00:02:00] story because it's really darling.

Emily: Um, it's funny to use the word adorable in the context of Roth IRAs, but, um, yeah, I have an aunt who is a financial planner and, yeah, when you were saying, like, this is something that the older generations are really excited about because it's new and like something they didn't have, like, I think she probably falls into that generation, but yeah, we were all together at my grandparents house one time. I don't remember what the occasion was. It was like a holiday or a birthday or something, and there was a lot of family over, so we were all, like spread across different tables, and actually my siblings, I don't think I was actually at this table, but my siblings sat with her, at a little table, kind of off in the office or something, kind of like the annex table, that got kicked out of the kitchen because there wasn’t room.

And somehow their topic of conversation landed on Roth IRAs. And it was funny [00:03:00] because if you had, like, peeked your head into that room and, like, seen the conversation taking place, it looked like the most interesting conversation in the world.

My siblings were, like, just locked in listening to every word she said.

And, this was probably, I would guess I was in, like, college at the time. My brother was probably in high school. Maybe my sister was in grad school. I don’t remember exactly, but I do remember like I later heard about it from my siblings and, um, they had just, like, gotten so much from this conversation that I think they both ended up opening Roth IRAs, like, as a result.

And, probably I did too. But yeah, I'm sure we would have like, learned about them and open them eventually regardless. But, I don't know. It was so sweet that she like, took the time to explain them in such detail and convince us that it was like a smart thing to do. Convince some like probably, somewhat disinterested, like, teenagers and early 20-somethings. But [00:04:00] yeah.

Cassidy: I love that story. I wanted you to share that story specifically because that is my hope for how I want everyone to feel by the time they get to the end of it. So if you're listening to this, I hope you're like Emily's siblings walking away from that table in the annex after talking to your aunt and that you just feel super pumped and like you, you know what you're doing. You understand it. 

Um, okay. So now we will get into the questions and our first listener said, please give a simple summary of a Roth IRA. Whenever I hear anything financial, I get so anxious and my brain stops working LMFAO. So can you explain it in a way that's easy to understand and not so scary?

Emily: I love this question and it like tees up, I think, the conversation really well because I wouldn't want to get into questions about Roth IRAs, I think without giving a higher level overview. So this is perfect. 

Okay, so let's start with square one. What even is a Roth IRA? A Roth [00:05:00] IRA is a type of retirement account where you pay taxes now on your contributions, and then you never pay taxes on that account again.

So like, if you invest $5,000 inside the account and it grows to $50,000, you've already paid taxes on the $5,000 before that money went into the account. So when that money grows to $50,000 and you're ready to withdraw it, it's completely tax-free money. You've already paid the taxes. So this is one of the most unique features of a Roth IRA because with most retirement accounts, you get a tax break now, but then you pay taxes on that money and any earnings when you use that money in retirement.

So, unlike a Roth IRA, this would look like getting a tax break on the $5,000 you invest now. But then, when that money grows to $50,000 and you take it out to use it down the road, you would pay taxes on that whole $50,000. Another important distinction is that a Roth IRA is an investment account, but [00:06:00] it's not an investment itself.

So you can think of it as like a basket that holds various investments, like stocks, bonds, mutual funds. That kind of thing. So that's one of the most defining features of a Roth IRA, that tax structure, but there are also a lot of other interesting and cool things about the account. So Cassidy, maybe do you want to talk about some withdrawal rules?

Cassidy: Yeah totally.

Emily: AKA when you can touch your money?

Cassidy: Totally, totally. So the cool thing about Roth IRAs is that you can withdraw your contributions, which is the money that you put into the account. at any time tax-free, because you've already paid taxes on the money before you put it into the account, but if you touch your earnings before age 59 ½, you could owe taxes and penalties unless it's for an approved reason. And the cool thing about Roth IRAs is that they have more approved reasons for when you can take money out before you're technically retirement age than, of any other retirement account that I know of.

So some of the approved reasons, just to give you some examples, are, you could withdraw up [00:07:00] to $10,000 if you’re buying a home for the first time, you can withdraw money to pay for qualified education expenses and medical expenses, you can withdraw money if you’re diagnosed with a disability, you can also withdraw money for births, adoptions, federally qualified natural disasters, if you’re a survivor of domestic abuse, if you are unemployed and paying medical insurance premiums, and a whole lot of other reasons. 

Now, there are caveats to these. Um, and more details you’ll need to know about, so if you are interested in seeing the full list of approved reasons, we do have, um, a link to an IRS publication in the show notes so you can dig into those on your own time. Um, but this is another reason why people love Roths.

Emily: Yeah, and so I think we should talk about who can open a Roth because there are a few caveats here. So most people with earned income can open a Roth. So that's important. If you have, a teenager who [00:08:00] has like a summer job, they can open a Roth. There is no age limit. Um, but there are upper bounds on how much you can contribute if you're a high earner. 

So, these are kind of broad rules of thumb. There are a few more details that if you're a high earner, you'll want to read directly from the IRS website. But essentially if you earn at least $230,000 and are married filing jointly, or $150,000 as a single filer, you may be able to contribute a reduced amount to your Roth IRA, or you might not be able to contribute at all if you earn more than those amounts.

But in general, if you are an average earner, or even a lower earner, and you want tax-free money in retirement, this is probably a good account option. 

Cassidy: And as far as contribution limits go for 2025, you can put up to $7,000 into a Roth IRA. Um, if you're over 50, [00:09:00] you can put $8,000 in there, which is $1,000 more. And that breaks down to about $583 per month if your goal is to max out that account every year. And these contribution limits do change every so often. They tend to get higher every few years just as cost of living goes up in general so if it's no longer 2025, you can also view a link in the show notes for the most up-to-date contribution limits.

Emily: Cool. Let's get on to our next listener question, which is, where can I open a Roth IRA?

Cassidy: Okay. Let me first say that the IRA part of Roth IRA stands for an Individual Retirement Arrangement, because it’s something that you open individually, just like you would a bank account. Like it's never offered by an employer, like a 401(k) is. And so, if you don't have one yet, you can open a Roth IRA at places like Fidelity, Vanguard, Charles Schwab, I personally have my Roth IRA with Ally [00:10:00] Invest. I use Ally Bank for all of my checking and savings accounts, and then I use Ally Invest, which is a part of the same company, for my retirement accounts. Emily, what do you do?

Emily: I use Vanguard. And I think if you're doing some research on where you want to open a Roth IRA, um, these are called brokerages. So you can search like, “top brokerage for Roth IRA,” and get some ideas there. But, I think they're all, for the most part, pretty comparable.

Cassidy: Yeah. I originally had my Roth IRA with Vanguard, but then I was trying to, like, condense the amount of financial accounts I had to keep up with in various places. So I rolled it over to Ally Invest because now whenever I log into my bank account, I see like a row for my checking, a row for my savings, a row for my Roth IRA. 

But honestly, I have, like, neither good or bad feelings about making the switch. Like I still love Vanguard so much. And sometimes I am like, I kind of miss being with them. But Ally Invest has been great too. 

Alright. The next question [00:11:00] is, is it wise to put most of my emergency fund in a Roth IRA? What are your thoughts, Emily? 

Emily: No. Your emergency fund should live in a high-yield savings account, um, and that's because if your money's in a high yield savings account in an insured bank or credit union, it won't lose value and you have access to it whenever you need it. 

Your Roth IRA, on the other hand, is not a savings account. It's an investment account and that makes it trickier to touch that money in an emergency. For instance, you might have to pay taxes and penalties on it. And your Roth IRA really is a good long-term investing strategy. So even though you can withdraw your contributions anytime, it's generally better to leave that money untouched if possible so it has more time and potential to grow. And I kind of already mentioned this, but yeah, it's just more complicated to go into your account and sell shares of investments than it is to withdraw money [00:12:00] from your high-yield savings account and with the stock market going up and down, you don't really know when those investments might be worth less. So it's just, it's just a lot more complicated. 

Okay, next question. At what age should I start being more conservative with my Roth IRA?

Cassidy: So if you want to take more of the hands-off approach, I would say just choose a target date fund inside of your Roth IRA whenever you're picking investments. And a target date fund is essentially a bucket of like, stocks, bonds, all types of things, and you choose a target date fund that aligns to the year that you think you're going to retire.

So, for example, if you think you're going to retire around 2060, you could choose a target date fund with 2060 in the title. And then what that fund does is, as it approaches your retirement date, it automatically gets more conservative for you. So you don't actually have to think about, do I need to change [00:13:00]how much of my Roth IRA is like, to stocks versus bonds versus this versus that. It, like, takes all of the guesswork and like actual work out of it for you. Um, so that’s kind of the easiest option. 

That said, it’s very, very personal and different advisors and experts will give you different advice, but generally, as you get closer to retirement, advisors suggest you take less risk with your investments, which means that you’re putting more money toward bonds and less of your money toward stocks. 

Um, if you want a general rule of thumb to go off of, if you’re like, I don’t want to do a target date fund, I want to do this thing myself, um there is a rule of thumb out there that says you can subtract your age from 110 and this gives you a target stock allocation as a percentage. So for example, if you are 30 years old, 110 minus 30 is 80. So, your IRA should be 80% invested in stocks. So, that is a rule of thumb you can use [00:14:00] if you want to.

The next question we have is from a listener who says, I have an IRA and a Roth IRA. So this person has a traditional IRA and a Roth IRA and they're asking, where should I put my contributions between the two? Like, how should I split it? What would you say?

Emily: This is a great, timely question because as we're recording, we're in the middle of February, so it is tax season and you might be thinking about where you want to make contributions before the deadline. So, a quick refresher, obviously this episode we're talking mostly about Roth IRAs, but there is such thing as a traditional IRA as well. And there's an important difference between the two. 

So a traditional IRA gives you a tax deduction now when you make the contributions, but then you'll pay taxes later when you withdraw earnings. And as we've said, a Roth IRA, on the other hand, you don't get any tax deductions now when you make [00:15:00] contributions, but your withdrawals in retirement are tax-free.

So, that said, the classic advice is if you think you'll be in a higher tax bracket later on when you need to withdraw your money, go with a Roth IRA, and if you need tax breaks right now, go with a traditional IRA. So a couple questions to ask yourself when you're trying to decide, you might ask yourself, do I need a tax deduction this year?

If the answer is yes, then you would go with Traditional. Another question is, are you making a lot of money and do you need to lower your tax bill? In that case, a traditional IRA again might be the right move.

But, Cassidy, why don't we just share our experiences of how we approach this question.

Cassidy: Whenever I got my first full time job, I was a fresh little 23-year-old baby. And, um, I was making $32,000 a year, and I was like, of [00:16:00] course, I plan on making more money than I do now in the future. I plan on being in a much higher tax bracket. So, my goal early on in my adult life was to max out that Roth IRA every single year. 

And I did that for years, but then, once I started freelancing, there was a series in time where my income increased pretty drastically. And I remember one year I was filing taxes and I was like, oh, crap. My tax bill is like, way bigger than I could have ever imagined. Side note, I had enough money in my emergency fund to cover it, so she was fine. 

Um, but that did make me think, maybe I should start pivoting my strategy and focus on maxing out my traditional IRA and all of those pre-tax accounts earlier. And so, yeah. A few years into my, like, freelancing career I pivoted and now my main focus is on maxing out, like, a traditional IRA and stuff like that because I want the tax break now. So like, if I [00:17:00] put $7,000 into my IRA now I want it to deduct my taxable income for the year by $7,000 now so I can get that tax break.

And that’s kind of how I’ve been viewing it lately. 

What about you Emily?

Emily: I have the exact same experience. Started out maxing out my Roth IRA and then made the switch to focusing on my traditional IRA. And I think it might be worth saying here that both you and I freelance. And so we are responsible for making quarterly estimated tax payments and, as freelancers, we're responsible for not only the employee portion of our taxes, but also the in quotes, employer portion.

So that adds up and if you're like, quickly increasing your earnings every year, it can be easy to get stuck with a large tax bill. And so, I think we both kind of had the same experience where that happened and we wanted to manage that tax bill a little bit. And making contributions to a [00:18:00] traditional IRA is kind of an easy way to do that.

Cassidy: I also eventually ran into the thing where I was married filing jointly and we were hitting those phase out limits to where, like, you couldn't contribute the whole amount, but I didn't know that. So I did contribute the full amount then I had to like, file a form when I filed my taxes to have money pulled out of my Roth IRA because I'd over-contributed and I would get penalized if not. And it like, once all of that happened, it felt too complicated. And I was like, I'm just gonna, redirect to doing more of the stuff that gets me a tax deduction now. So those are just like future things to keep in mind. Or maybe they already apply to you. Who knows?

Emily: Okay. Next question. How do I actually invest the money that's inside my IRA?

Cassidy: First of all, I love that you asked this because so many people think that just opening a Roth IRA means that you're investing, but when you put money into an IRA in general, whether it's Roth or traditional, it's just sitting there inside that account until you tell it what to do. And by [00:19:00] tell it what to do, I mean until you actually pick your investments inside of the account. 

And there are so many horror stories online of people who moved money into their Roth IRA every single month for decades, but they never logged into that account to invest that money in anything, so their balance barely grew. Like they didn't get to take advantage of compound interest and time doing its thing because the money was essentially just sitting inside the account waiting to be invested in something. 

Um, so that is just a cautionary tale to keep in mind that once you open your Roth IRA and move money in it you still have to log in and choose your investments and move money into there.

So that question leads us to, where do you put this money? Like what, how, in the world do I choose investments? And there are kind of two approaches you can take to this.

The first one is, if you want a fully hands-off investing approach, like I said earlier, look for a target date fund. And this automatically adjusts as you get older, so all you need to do is think about, [00:20:00] around what year do I plan on retiring? And look for a target date fund with that year in the title.

If you’re okay with a little more involvement, you want to be a little more hands-on, you can look at a total market or S&P 500 index fund, is a great beginner-friendly choice. And you can choose, like, I don’t know, maybe an S&P 500 index fund and a bond fund, or something like that and kind of do your own allocation as you see fit.

And I’ll just go ahead and say, Emily can share her experience next, but this is actually what I do. I was okay with a little more involvement, I don’t know, it felt like an okay thing to do, so I’m a little more hands-on with my Roth IRA. I just looked inside of my account right before we started recording so I could see exactly what I was invested in, and my portfolio is mainly in VUG, which is a Vanguard growth ETF; VIG, which is a Vanguard dividend appreciation ETF; and [00:21:00] VOO, which is a Vanguard S&P 500 ETF; and then I also have a small portion, like maybe 10% of my account in BND, which is like a Vanguard bond market fund.

 Emily, what do you do?

Emily: Yeah, I take the first approach and I just invest all of my Roth IRA contributions into a target date fund. The one I use is VTTSX, it's a 2060 target retirement fund. 

And I will say, I think this is an important point. Your approach, I think, definitely can be more efficient in terms of, like, costs, fees. Like, I think that is the main advantage of doing it yourself. 

However, my philosophy is, I guess, was when I, like, initially started investing in a Roth IRA, was just, what is the path of least resistance for me to start investing. And for me, that was just choosing the target date fund because it was like one decision I had to [00:22:00] make and I don't have to rebalance or anything like that. And I see it as one of those, like, 80% solutions where it's not perfect, but it's a whole lot better than stressing over my allocations. So if you feel similarly overwhelmed, that is an approach to consider. And you can always change your mind later, so nothing is permanent.

Cassidy: I opened my Roth IRA so long ago. I honestly don't know why I chose so many different ETFs, but I think in hindsight, I wish I just would have gone with a target date fund. But yeah, if, you're at all overwhelmed, take the easiest way.

And in saying all of that, Emily and I are sharing our experiences, not to recommend anything or give advice or anything like that. We do not want to get in legal trouble, uh, we are just simply sharing with you what we have done. So, yeah.

Okay. The next question is, what are the tax benefits of a Roth IRA as a freelancer versus a traditional IRA? My husband and I have [00:23:00] a financial advisor who helps us, but I still don't really get it how he explains it to me, LOL.

Emily: I love this question too. Also, it's kind of, it's not that surprising. I feel like many financial advisors are not trained or skilled at explaining things in an easy-to-understand way. Anyway, that's another topic. 

So, essentially, there's no difference, whether you're a freelancer or an employee when it comes to investing in traditional or Roth IRAs. The same rules apply. We did mention earlier that both Cassidy and I individually changed course with our strategy by contributing to our traditional IRAs rather than Roth IRAs because we wanted that tax break now. And I think part of that reason is because we are freelancers, so that is something to consider.

But there is no difference whether you're a freelancer or, or an employee, when it comes to these accounts because [00:24:00] they are individual retirement arrangements, as we said, they're not provided through your work, like a 401(k) would be, so both freelancers and employees have access to these accounts and can choose their strategy regardless.

So one other just, quick note, we won't get into this too much, but there are other IRAs that are available to business owners. For example, SEP IRAs and Simple IRAs. And these have different contribution limits and different, some slightly different rules. So if you are a freelancer or a business owner and want to learn if and how you can use these additional accounts, feel free to ask your accountant or tax professional.

Alright. That brings us to our last question, which is a really good one. So this listener says, truly, the question I have right now is, should I still be investing money right now when everything is straight chaos? I truly have just been squirreling my IRA cash in a savings account since November because the world [00:25:00] feels too insane.

Cassidy: There are so many layers to this question and I'm so glad it was asked because I do feel like there is this subconscious thought in the back of our heads of, when the world feels like it's on fire, socially, politically, globally, it can feel weird or even wrong to think about investing. So I'm really glad that this person submitted this question. 

And you and I talked about this question beforehand, and I think there are kind of, like, four different ways to approach this, depending on what chaos feels like for you. Um, so Emily and I are gonna go through a few different answers.

Before we get into this though I just want to say, regardless of your situation, you want to make sure that you have a fully funded emergency account before you invest in a Roth IRA for peace of mind. So if you are squirreling away IRA cash in a savings account, but like [00:26:00] you don't have any other emergency savings, then in that case, like, it might be good to keep that money there so you have access to it more easily if there is truly an emergency. 

But, because we didn't ask this person any follow up questions, we are going to assume that they have a fully funded emergency fund. They have money that they do want to invest in a Roth IRA but they feel like they shouldn't be because, like, the world is too chaotic right now. 

So, let's dig into this question a little bit. Let's say that you do feel like the world is truly on fire politically, globally, and you're just like, I don't even see the point in investing right now. Like, let's address that. To which I would say, investing doesn't mean that you're ignoring the world's pain or turning a blind eye to injustice. If anything, your investments can actually be a form of activism. 

Um, Emily and I are both huge fans of the book Financial Feminist by Tori Dunlap and one thing that she says in that book is, when you have all you need, build a longer table, [00:27:00] not a higher fence. Because when you’re well-nourished you can tear down the fences other people have built. Because essentially you have to take care of yourself so you can take care of other people. So by you choosing to invest, you are essentially setting up future you to be able to build a longer table for your community, for all the people in your life, to fight the injustices that you see going on in the world.

And so if anything that money is going to give 60-year-old you, 70-year-old you the power to like, really, really, really fight back on some of these things. And that is a really beautiful thing. And, in a lot of instances, that alone is enough to, like, keep investing despite how chaotic the world feels. 

Emily: I think that's a really good point. And I love that quote from Tori Dunlap's book. I think she has a really great perspective on how to operate in a system of capitalism when it doesn't always feel good, which I think for most people listening is the case. So definitely check that out if you are curious [00:28:00] more about her perspective.

But the next point I think we should make is that the stock market is the most accessible wealth-building tool that we have. With just a few dollars, I mean, literally you can invest in the stock market, and that has not always been the case. And also the stock market has a history of growing over time. Most people can't save their way to retirement. Like if you are an average person earning an average income, the math does not work out. and so you need to invest to get there. Most people do. 

Only you, unfortunately, as like, sad as it sounds, only you will take care of you in the future. So, I think you just kind of have to think about how you want to live in retirement and just let that be a little bit of your motivation when things feel tough and uncertain. Think of your future self.

Cassidy: You may also feel like, why should I invest money right now if the stock market feels chaotic? So that could be another thought. [00:29:00] And so statistically, those who stay invested during downturns come out ahead when the market recovers. And, if it helps, you do not have to invest all of your money at once if you're like, I don't know if I'm investing when the market's high or when the market's low and this feels all confusing and I don't know. You can do the dollar cost averaging method, which sounds really fancy. It's what Emily and I both do, but it's just where you invest smaller amounts regularly versus dumping a whole lot of money in there at once. So you can say, I’m gonna invest $50 a month when I get paid, no matter what the market looks like and you kind of just don’t even pay attention to is the market high right now, is the market low? Like you kind of just stay the course. You invest the same amount and keep it at that, and this can feel gentler because you're kind of easing into the market over time. 

Emily: What I like about dollar cost averaging is that you don't have to stay tuned in to what's going on with the markets because you're just doing the same thing every single month [00:30:00] or every single paycheck, however, you want to set it up. So you just, you don't even have to think about it and I think that is such a blessing when it comes to investing because the more you keep tabs on what's going on, I think the more likely you are to let your emotions take over and do something that you might later regret.

Cassidy: I personally try to tune out as much stock market noise and information as I can. Because I'm like, it doesn’t matter, you're invested for the long term. Like, just stay the course.

Emily: Yeah. And then, our final point we want to touch on with this question is maybe you're worried about where your money is going and you don't want to support certain companies or industries that you feel like are contributing to a lot of the harm that's happening in the world today and that's totally valid.

You can always look for ways to [00:31:00] align your investments with your values. So one thing to look into is called ESG investing, which stands for environmental, social, and governance investing. And ESG funds include companies that essentially have to meet certain standards in these three categories in order to be included in those funds. There's also impact investing, which is similar. So with these types of investing, your dollars are supporting companies that ideally are working toward a better future.

Cassidy: So those are all the questions that were submitted about Roth IRAs specifically. If we have said anything that doesn't make sense or has sparked an idea or you have a follow-up question, please let us know. You can email us at anytime at hello@finance girlies.com.

But at the end of the day, the best retirement account is the one that you'll actually contribute to. If you are overwhelmed, our encouragement to you would be to just start. Even if it's $25 a month, even if it's $50 [00:32:00] a month, and like Emily does with her Roth IRA, if you're even torn on what investments to choose, you can even just go with a target date fund, for your ideal retirement year. 

But Roth IRAs are amazing if you want future tax-free money. If you need a tax break today, though, like we said, you may want to look into a traditional IRA instead. But investing, no matter in what type of account you use, allows you to build meaningful wealth. 

Cassidy: And just to give you all a little bit of context, Emily and I wanted to share a few examples of, like, what your wealth could turn into even if you start small and then also what it could turn into if you commit to maxing out this account every year. 

But first let's say that you're 30 years old and you're like, I think that I can contribute $100 to my Roth IRA, and you want to retire at age 65. Your estimated IRA balance at 65 just from saving $100 a month would be $165,000. And that would be [00:33:00] tax-free money because you've already paid taxes on your contributions that you could then use for anything. 

But, let’s say that you were like, I think I can start contributing the max amount of money every year, which for 2025 is $7,000 if you’re younger than 50. If you were like, I'm going to save, whatever it breaks down to 500 and something dollars every single month. Gonna max this baby out. You would have over $1.1 million if you started now and even just committed to that, if you are financially able to do so. 

And this is really like the most exciting thing that we want to drive home to you. It's just how much wealth you can build with a Roth IRA, even if you start small or smallish.

Emily: Mmhmm, and one thing you said that I just wanted to, comment on is your Roth IRA can be, like, a supplementary retirement account if you have a 401(k) that you contribute to through your work [00:34:00] or you have a solo 401(k) if you're a business owner, like a Roth IRA very well may not be your only retirement account, but it's still a worthwhile tool to supplement whatever else you're using and at the same time if you're only investing in a Roth IRA right now, that's okay, too. You're still making a lot of good progress.

Cassidy: Like Emily said, you can't save your way to retirement. In most cases, you really have to lean on investing to get you there. So just keep that in mind as you try to push through any fear or uncertainty that you may be feeling. But yeah, if you're still confused, please reach out to us. We love making finance less scary for you.

Emily: See you next time. 

Cassidy: Love it.

Emily + Cassidy
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