Why You Should Max Out Roth or Traditional IRA

The road to a comfortable retirement can get easier if you make the most of an IRA.

Saving in an individual retirement account can be an easy and accessible way to prepare for your financial future, experts say, especially if you don’t have access to a workplace retirement plan. 

Contribution limits are set according to the IRS and can vary year to year. For 2026, investors can contribute up to $7,500 in either a traditional or Roth IRA. Those who are 50 and older can contribute an extra $1,100 in catch-up contributions.

How maxing out your IRA can pad your balance at retirement

It’s estimated that over time you could see an average annual growth of 5% to 10%, adjusted for inflation. Some experts say you can safely use 8%, which has been roughly the compound annual growth rate of the S&P 500 since 1980.

3 tips to make the most of an IRA

It may not be always easy to stick to a retirement saving plan. Getting started ASAP is key. Here are some tips from experts to make the most of your IRA:

Invest your IRA contributions

Once you’ve opened an IRA, the next step is picking your investments. Some accountholders forget and leave their contributions lingering in cash.

“Saving is step one but investing that money appropriately is the all-important second step,” says Bankrate chief analyst Greg McBride. If it fits in your plan, “favor broad-based, low-cost index funds, build a diversified portfolio and stick with this over time. Do not chase the hot investment of the day.”

Review investment and account fees

Make sure you understand the fees for and investments in your account. What seem like small differences in fees can, over decades, add up to tens of thousands of dollars.

“Fees are really important — they matter a lot in long-term investing,” Will Rhind, CEO of ETF firm GraniteShares, told Grow. “And cost is something that you can control. You can’t control the market or how the IRS is going to tax you, but you can control the fees that you pay.”

Stay invested through tough times

“Millennials and Gen Z tend to have significant money-intensive needs like student debt, paying mortgage, and starting a family,” says Carol Tompkins, a business development consultant at accounting software website Accounts Portal. But withdrawing money now hurts your retirement prospects down the line.

Instead, try to “build up emergency funds and live within your means to avoid having to make an early withdrawal,” she says.

All investments involve risk, including loss of principal. This information is for illustrative purposes only and shows hypothetical projections that assume an 6% fixed annual rate of return, with the noted contributions over the referenced time periods, exclusive of fees. A 6% annual return was selected as an arbitrary figure to show the potential impact of long-term investing and compound returns. The illustration is not intended to predict the investment performance of any security or index. Such results do not take into consideration economic or market factors which can impact performance. Actual investments results may be materially different from those portrayed. The strategies and investments discussed may not be suitable for all investors and should not be construed as investment advice. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions.