Here’s how to max out your Roth IRA in 2018



Hitting the maximum speed limit for the first time while driving? Exhilarating, but fleeting. Maxing out your Roth IRA? Less exhilarating, but much more rewarding.

Whether the balance in your retirement accounts sits at empty or you’re trying to rev up your planning, it may be time to take a Roth IRA for a spin. This type of individual retirement account will grant you access to a broader array of investments that often have lower fees than employer-sponsored plans. And even with 2017 in the rearview mirror, you have until April 17 to contribute to these IRAs for that tax year.

Whether you’re looking to max out last year’s or this year’s contributions, the following tips will keep you on track.

1. Open an account

It’ll be hard to max out a Roth IRA without an account and stuffing money in a shoebox won’t cut it. Why IRA the Roth way? These accounts offer valuable tax advantages – money and investment earnings grow tax-free, and there’s no income tax on withdrawals during retirement – plus, you’ll benefit from compounding interest (earning interest on both investments and interest over time).

2. Envision your future

It can be difficult to prioritize far-off goals, especially with opportunities for instant gratification today. Experts recommend saving up to 15 percent of your pretax income each year for retirement.

If you don’t want to work forever, you’ll probably need to save more than what’s allowable in an employer-sponsored plan (a maximum of $18,500 for workers under the age of 50 for tax year 2018). Use a retirement calculator to check whether you’re on-track.

3. Set manageable goals, then make regular contributions

Retirement planning is a decadeslong journey and even shorter-term goals, such as setting aside $5,500 in one year, can be daunting for most people. This isn’t the type of loose change you likely have laying around – and it’s money you won’t be able to touch (without incurring penalties) for decades to come.

But breaking down that $5,500 goal into a more manageable weekly or monthly amount may help. Maxing out contributions this year works out to about $15.07 a day, roughly $105.77 each week or about $458.33 monthly.

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