Planning for your financial success is a great way to kick off the new year. For instance, if you’re aiming to take your Roth IRA (individual retirement account) to the next level in 2024, now is a great time to get the ball rolling. The IRS announced the new contribution limits last month, which gives you time to plan ahead for a prosperous 2024.
If you’re looking for a simple list of to-dos that you can scratch off your list, here are a few quick steps you can take to achieve your 2024 Roth IRA goals with ease.
Image source: Getty Images.
1. Determine your Roth IRA goals
Before you start dumping money into your Roth IRA, it’s important to think about your goals. It’s easier to be consistent if you know what you’re working toward. Here are a few questions to ask yourself as you develop your goals:
- How much income do you expect to earn in 2024?
- What is your current financial situation?
- What other retirement accounts do you want to contribute to in 2024?
- When do you plan to retire?
- What are your long-term financial goals?
You may not have all the answers yet, but don’t let that stop you from getting started on your journey. The point of this exercise is to get a ballpark figure of where you want to go so that you can make sure your current actions line up with your long-term goals. You also want to determine if you meet the income requirements to make direct contributions to a Roth IRA before you go too deeply into the planning process. If your income is too high, you can always look into a Backdoor Roth IRA.
2. Create a contribution plan
You can kick off your planning by becoming familiar with the Roth IRA contribution limits. For 2024, you can tuck away up to $7,000 in a Roth IRA. But if you are 50 and older, you can contribute up to $8,000 in a Roth IRA for 2024. This can help you get closer to your retirement goals.
Let’s say you are 55 years old and want to max out your Roth IRA in 2024. You can contribute equal amounts from your checking account to your Roth IRA every week or month. That could mean contributing around $667 every month for 12 months to reach your goal before the end of the year. You could also contribute around $154 every week for 52 weeks to meet your goal.
The best way to ensure you stick to your contribution plan is by putting it on autopilot. Determine your contribution amount and frequency, and allow your contributions to automatically flow from your checking account to your Roth IRA.
3. Set your personal contribution deadline
You have until April 15, 2025 to contribute money to a Roth IRA for 2024. That being said, there’s no rush to make all your Roth IRA contributions by Dec. 31. You can set up a contribution plan and deadline that makes sense for your financial situation.
Let’s say you need to beef up your emergency fund balance before you contribute to your Roth IRA. You can set aside money toward your emergency fund goals from January through March and focus on your Roth IRA goals next. You could also start with a smaller contribution amount at the beginning of the year and increase your contributions after you’ve tackled other financial goals. That could mean starting with $25 a week in January and February, and then boosting your contributions in future months.
On the flip side, if you receive extra money from a bonus or promotion, you can front load your Roth IRA contributions. This can give your money more time to grow in the markets.
Having a target date in mind will allow you to set up a contribution system that makes it easier to achieve your goals. You can aim to wrap up 2024 contributions by the end of the year or take the extra time to fund your account by the tax-filing deadline.
You’re closer to your 2024 Roth IRA victory
After you’ve checked the boxes on the above items, you’ll be in a good position to reach your 2024 Roth IRA goals. It’s important to start with a vision of where you want to go to keep you motivated when curve balls come your way. But by getting started early, you’ll have a better chance of crushing your 2024 Roth IRA goals and collecting more tax-free income during retirement.
