The Secret to Crushing Your Roth IRA Retirement Savings Goals | Smart Change: Personal Finance

Typically, a saver under the age of 50 could set aside $ 500 a month for a Roth IRA and reach the $ 6,000 limit in 12 months.

However, if you are 50 or older and use a $ 500 per month contribution rate, you may still be able to maximize your contributions to that $ 7,000 level. This is because savers can continue with Roth IRA contributions a year ago until the tax filing deadline. Read also : Biden tax plan may spur boost in Roth retirement accounts. So, if you contributed $ 500 each month from January to December and added an additional $ 500 in January and February, you could allocate it retroactively over the previous year and achieve your maximum annual contribution goal of $ 7,000.

But there’s a catch in all of this: You can never contribute more to your IRA than you earn in a year. So, if you only earned $ 4,000 in a given year, you will be limited to a $ 4,000 contribution to your Roth IRA.

Achieving your financial goals comes down to two numbers: income and expenses. If you need to increase your income, note down different ways to accomplish this. You can ask for a raise at work, look for more rewarding opportunities, or teach others what you know. But be careful: if you make too much money, you will not be entitled to a direct contribution to the Roth IRA. At that point, other strategies may be more useful to you. Maybe you should consider and backdoor Roth IRA.