The One Retirement Account Worth Understanding Early

Welcome back to another edition of "Rolling in Dough" Newsletter, where we serve up the simplest ways to save more, spend less, and build wealth with regular insights, behavioral science hacks, and tiny tips to do today. I hope to make your financial journey a little fun, simple, and totally doable, where ever you are on your wealth journey.

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What It Is & Why It’s So Powerful

A Roth IRA is a personal retirement account you open on your own, separate from your job.

You put in money you’ve already paid taxes on, and that money sits in the account and grows over time. Later on, when you take money out in retirement, you don’t owe taxes on it.

Because it isn’t tied to an employer, you choose where to open it, what you invest in, and how it fits into your life.

That control is a big reason this account tends to stay with people for decades, even as jobs, income, and priorities change.

Why This Account Stands Out

What makes a Roth IRA especially useful is how flexible it becomes over time, without feeling like your money is completely locked away.

You put money in that you’ve already paid taxes on, and once it’s in the account, it can grow without future taxes getting in the way. But the part most people don’t realize is how accessible it can become:

After the account has been open for five years, you can take out the money you personally contributed at any time, for any reason, without taxes or penalties.

Yep, that’s right. You have access to your contributed money in a Roth IRA, unlike other retirement accounts that lock away your money, save a few exceptions or penalty, until you’re 59 ½.

That means the money you put in to a Roth IRA isn’t off-limits forever. While the account is still meant to support you later in life, your contributions don’t disappear behind a wall you can’t touch. That flexibility is what makes this account feel realistic for real life, not just a far-off future.

It gives you a way to save with structure, without making your money feel untouchable.

How to Take Advantage of a Roth IRA (Even if you feel like you’re starting late)

A Roth IRA works best when you actually use it, and the rules around it are part of what makes it so powerful.

How much you can put in

For 2025, you can contribute up to $7,000 per year (or $8,000 if you’re 50 or older). You don’t need to put it in all at once. You can add money weekly, monthly, or whenever it makes sense for you.

If you spread the full amount out:

• That’s about $135 a week

• Or roughly $19 a day

Which, for most people, is about the cost of a fast food meal or a DoorDash.

You have more time than you think

You don’t have to finish contributions by December 31.
You have until Tax Day of the following year (usually April 15) to fully fund your Roth IRA for 2025.

That means you can still contribute for 2025 well into 2026, as long as you stay within the yearly limit.

There’s an income limit for a reason

Not everyone is allowed to contribute directly to a Roth IRA. Once your income goes above certain levels, access starts to phase out.

That’s a quiet signal that this account is valuable.
It also means that if you’re eligible now, it’s worth taking advantage early, because eligibility isn’t guaranteed forever.

What this can actually turn into

To put the impact into perspective:
If someone had contributed the maximum amount each year for the last 15 years and invested it simply in something that tracked the S&P 500 (like SPY), they’d be looking at over a quarter of a million dollars today.

Not because of perfect timing or smart picks, just consistency and time.

And if you’re starting now

You’re not late.
You don’t need to max it out immediately.

Starting with what you can, even small amounts, still gives your money time to build on itself.

The earlier you start, the more time does the work for you, but starting later is still far better than not starting at all.

And remember, you have access to the money you’ve contributed after the account has been open for five years.

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How This Compares to Other Retirement Accounts

401(k) vs Roth IRA vs Traditional IRA: The Real Differences

Where the account comes from

• 401(k): Through your job

• Roth IRA: Opened by you

• Traditional IRA: Opened by you

When taxes show up

• 401(k): Money goes in from your paycheck before taxes; you pay taxes when you take it out later.

• Traditional IRA: Money usually goes in before taxes; you pay taxes when you take it out later.

• Roth IRA: Money goes in after taxes from your paycheck or bank account; you don’t pay taxes when you take it out later.

When You Can Get the Money Out

• 401(k): After 59½ or pay taxes + a 10% penalty (some exceptions).

• Traditional IRA: After 59½ or pay taxes + a 10% penalty (few exceptions).

• Roth IRA: Contributions can be withdrawn after the account has been open five years, at any age.

How flexible the money is

• 401(k): Least flexible

• Traditional IRA: Some flexibility

• Roth IRA: Most flexible

How much control you have

• 401(k): Limited to your employer’s options

• IRAs: You decide where it’s held and how it’s invested

This is why many people focus on understanding the Roth IRA early. It doesn’t replace other accounts, it works alongside them, and it gives you a base that moves with you as your life changes.

A Few Things Worth Keeping in Mind

There are income limits, so not everyone can add money to a Roth IRA every year.

For 2025, you can contribute to a Roth IRA if your income is under $165,000 as a single filer (or under $246,000 if married filing jointly), with full contributions allowed below $150,000 and $236,000, respectively.

Additionally, while you can withdraw your contributing money at any age, after the account has been open five years, there are stricter rules for earnings (money you are set to make on top of what you put in).

There are also yearly contribution limits, which means this account usually works best as part of a bigger picture, not the only place you save.

And like any investment account, the value will move up and down over time. The real benefit shows up when you give it time and don’t react to short-term noise.

👋  TO GO BITES: The Wrap Up

A Roth IRA gives you something most retirement accounts don’t: flexibility and long-term upside in the same place.

• You choose where to open it and what to invest in.

• The money you put in can be accessed later, once the account has been open for five years.

• And anything you leave invested can grow without future taxes getting in the way.

You don’t have to max it out to benefit, and it’s not too late to start. If you’re eligible, this is one of the simplest ways to build something meaningful over time without locking yourself into one job, one plan, or one path.

It’s not the only account you’ll ever use, but it’s one worth understanding early.

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