Get started early
Starting early makes a difference, because your money has more time to grow. Don't be intimidated by the amount—contribute what you can every year to make an impact!
The hypothetical illustration assumes a 7% nominal annual growth rate on investments. The constant $6,000 contribution is made at the beginning of each year starting at ages 25 and 35 respectively. The total balances for the two hypothetical portfolios are then compared as the assumed retirement age of 65. All accumulated retirement savings amounts are shown in future (nominal) dollars. The illustration does not take into account any taxes or fees. Your own account may earn more or less than this example and income taxes will be due when you withdraw from your account. Investing in this manner does not ensure a profit or guarantee against a loss in declining markets. Investments that have potential for a 7% annual rate of return also come with risk of loss.
You can contribute online using your computer or mobile device until your state's tax deadline that calendar year. Be sure to confirm that you're contributing for the correct year.
Know your limits
When you have earned income, you can contribute it to an IRA up to the maximum annual limit of $6,000 in 2019 and $6,000 in 2020. If you're 50 or older, you're allowed to contribute an additional $1,000. If you have more than one IRA, the total contribution to all your IRAs can't exceed the annual limit.
With Roth IRAs, you can contribute at any age as long as you have earned income. Starting in 2020, as long as you are still working, there is no age limit to be able to contribute to a Traditional IRA. The Secure Act, signed into law on December 20, 2019, removed the age limit in which an individual can contribute to an IRA. The top age prior to the law was 70½. With a Traditional IRA, you will need to take required minimum distributions (RMDs) at age 72.† The Roth IRA does not require RMDs, however you will only be able to contribute if your income falls within the allowable income limits. If you are unsure of how much you can contribute, use our calculator.
Make it a habit
Once you've calculated and made your contribution, don't forget to invest it. Contributions must be invested to maximize your savings. You can learn more about setting up a contribution schedule using Automatic Investments. Automatic investments allow you to select an amount, the date, and the frequency of investments. You're able to update this as your financial situation changes.