Maxing Out Roth IRA: Key Milestone for Financial Success

Maxing out Roth IRA is a powerful, tax-free path to financial success, offering low expenses, tax-free growth, investment options, and contribution flexibility.

### Max Out Your Roth IRA: A Path to Tax-Free Millionaire Status
* 💰  The maximum contribution for a Roth IRA in 2024 is **$7,000**, or **$8,000 for those aged 50 or over**, which works out to around **$583 a month**.
* 🏦  Roth IRAs offer benefits like **tax-free growth**, a **wide selection of investment options**, and **contribution flexibility**, with the option to **access funds in emergencies**.
* 📈  By maxing out your Roth IRA, you can take advantage of the government's limited opportunity for **tax-free growth**, with **up to 86% of the account potentially being growth**.
* 🎉  Maxing out your Roth IRA is a **key milestone** in the financial order of operations, moving you from **step five to step six**.
* 💸  The earlier you start **maxing out your Roth IRA**, the less likely you are to have regrets in the future, as even small missed contributions can have a **significant impact over time**.
* 💡 " I'm telling you small decision today can have **huge impacts**. Yes, I feel like this did not derail my financial life. You do not have to have Perfection to be successful, but be **honest with yourself**.
* 📊 " If you fast forward that **$68,000 close to $69,000 by the time I reach 65 years of age**, that same **$10,000 would have had the opportunity to become $332,000 of tax-free money**.
* 🔒 " The best time to have done it was **yesterday**. The second best time to do it is **today**.

[Music] all right Brian let's talk about the next Milestone. The next cash flow Milestone that's worth celebrating. It's a big deal, and this is another one that's near and dear to our hearts: maxing out your Roth IRA. Oh man, I love Roth IRAs because these things, this is your path to becoming a tax-free millionaire, and it starts with small, once again, small incremental decisions. If you think about the maximum that you can fund in 2024 is $7,000. Now, if you're 50 or over, somebody at this table resembles that, you can actually do $8,000. That works out to be right around $583 a month. It's not crazy, it doesn't take a ton of capital to be able to do this, but if you can begin maxing out your WTH and you can establish that behavior, it sets your future self up for success. And why is Roth the account that we picked? Why is that the one that we wanted to hold in on? Because we think

that Roth dollars are amazing. There are some huge benefits to Roth, the first being when you open up a Roth account, you get to choose where you open it, what custodian. Well, when you choose a low-cost provider like a Fidelity, like a Charles Schwab, like a Vanguard, you naturally, if you're buying low-cost index funds, you're going to have low expenses, low fees. You get to keep more of your dollars working for you for the future. I also like the tax-free growth. I've already hit on this. Think about on those previous slides when we were talking about that 86% of your account could be the growth, not what you contributed, but actually the growth of the account. If that's tax-free, that is that much sexier for the future. So take advantage of letting that exponential growth build up completely tax-free. Another benefit of Roth is, unlike your 401k, which might only have a few investment options available, you have a huge selection of investment options. Again, if you use a low-cost provider like a Fidelity.

Schwab or Vanguard. You can select from the entire Universe of low-cost index funds and ETFs. So, there's a huge opportunity for you to again have very efficient dollars working for you for the future. And then lastly, the flexibility of the contributions. Think about the fact that you know you have until April 15th of the following year to fully fund this. Also, Roth IRAs have a break glass in case of emergency provision where if you got into a really bad pickle, you could actually get access to the basis of your Roth IRA to be that emergency fund. We don't love that, but it's still nice that it has that flexibility of the contributions. Look, this is the last thing I'll say about the Roth part. The government restricts how much you can put in. The government restricts how much money you can make to even have access to this. There's a reason that they have put so many restrictions on this powerful tool. You're crazy if you're missing out on this limited opportunity that the

government's laying out for you, just so you can build your financial future. Another reason why we think this is a great milestone and one worth celebrating, because if you're following the financial order of operation, Brian, can you hold the thing up? If you're following the financial order of operations, one of the huge benefits once you've maxed out your Roth IRAs is you get to continue moving along in the food. You get to go from step five now to step six, so that's a milestone in and of itself worth celebrating. And the earlier you can do this, the sooner you can figure this out, the less likely you might have future regrets, 'cause sometimes people look back and think, man, what if? I think one of the powers of the show is that I am transparent with my mistakes and um, look, I had my own messy middle moments in the '90s and early 2000s, and the fact that my wife and I had just bought a house then, i' had lost my father, and I was then using that life.

moment to save up to start my first business in 2002, and all during that period because remember Roth IRAs came on the scene in 1998, and I'm very proud of the fact that I loaded up that 1998 Roth, but I ran into some. I still funded these accounts, but if you added it up, there was $10,000 between 1999 to all the way through 2003 because of life that I left a little bit here and there on the table. Now I am nerdy enough that I went and calculated what my Roth accounts are worth now, and I detailed all this in millionaire Mission, and this is why it's my Roth IRA regret, and I figured out I was making 99.3% annually if you annualized all my contributions and what I've actually earned on my Roth assets, and I said, okay, that $10,000 of here and there $1,000 here or there, it seemed like it was just a small decision at the time, right now.

what would that account be worth, and when we figured it out at that 99.3%, that $10,000 small decision would now be worth close to $70,000. Insane. That's that stinks and tax regret that's tax-free growth that I left on the table, but here's what will really make your kind of your hair on your arm stand up. If you then expand that because remember we don't need to think linearly, we need to think exponentially because the more time we can give our assets to work, the more they grow upon themselves. If you fast forward that $68,000 close to $69,000 by the time I reach 65 years of age, that same $10,000 would have had the opportunity to become $332,000 of tax-free money. I'm telling you small decision today can have huge impacts. Yes, I feel like this did not derail my financial life. You do not have to have Perfection to be successful, but be honest with yourself. It is these small

little decisions that you give up $1,000 here. $2,000 there. that can lead to an over quarter of a million dollar mistake that I've made in the past. and the sooner you figure it out. the better. the best time to have done it was yesterday. the second best time to do it is today.

Why Maxing Out Your Roth IRA Is Worth Celebrating!

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Maximizing Your Roth IRA for Financial Success

Maxing out your Roth IRA with small, incremental decisions can lead to tax-free millionaire status, requiring as little as $583 a month.

Choosing a low-cost provider for your Roth account, like Fidelity or Vanguard, allows you to keep more of your dollars with low expenses and fees.

Additionally, the tax-free growth and wide range of investment options make Roth IRAs a powerful tool for building wealth for the future.

Comparing Schwab and Vanguard for Roth IRAs

Both Schwab and Vanguard offer a wide range of low-cost index funds and ETFs for efficient long-term investing.

Roth IRAs provide flexibility in contributions, with a provision for emergency fund access, but with government restrictions on contribution amounts and income levels.

Maxing out Roth IRAs is a significant milestone in the financial order of operation, allowing for progression to the next steps and avoiding potential future regrets.

The Significance of Maxing Out Your Roth IRA Contributions

Maxing out Roth IRA contributions can lead to significant growth, as evidenced by the speaker's 99.

Even small, seemingly insignificant contributions can result in substantial tax-free money in the long run.

The story highlights the exponential growth potential of consistent Roth IRA contributions over time.

Small financial decisions can accumulate into significant mistakes, potentially resulting in a loss of over a quarter of a million dollars.

It is crucial to address these mistakes as early as possible.

Procrastination only exacerbates the impact of financial errors.