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Ask Tori: Should I Max Out My Roth IRA Now or Wait?

January 26, 2024

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I'm Tori!

After successfully saving $100,000 at age 25, I quit my corporate job in marketing to fight for your financial rights. I’ve helped over three million badass women make more, spend less, and feel financially confident.

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Margaret from Chicago writes:

Dear Tori,

I planned to max out my Roth IRA in 2024, but I’m getting married in September and there’s a chance I might need some or all of it for the wedding. So should I contribute the full amount now and withdraw later if I need to, or should I wait to contribute until later? I’m currently keeping the money in my HYSA (getting more than 4% APY!) just fyi. 

Thanks!

Margaret

Before You Take Any Money Advice (Even From Me!)

First things first: personal finance is personal. The choices you make should align with your personal goals and values, and no one can make those choices except you

Last caveat: I’m not a financial advisor, and this isn’t financial advice.

All that said, I can tell you how I’d think about and approach this. There are some financial rules of thumb that can act as helpful guidelines as you make your choices.

What You Need to Know About Roth IRA Contributions 

Here’s some info that I think would be helpful to make this decision:

A Roth IRA (or individual retirement account) is a type of investment that lets you contribute after-tax dollars with a yearly limit. Earnings and withdrawals are tax-free once you hit 59 ½ years old as long as the initial contribution was made at least 5 years prior.

  • You can withdraw contributions from a Roth without penalties, but not earnings.
  • For 2024, the maximum contribution is $7,000 if you’re under 50/$8,000 if you’re over 50.
  • You can make contributions until April 2025!!

One more note: these rules are different from traditional IRAs!

Comparing Your Options

If you do contribute now, you’ll still be able to easily withdraw the money, which is great. 

The biggest benefit is getting your money in now so it can start compounding. While your HYSA APY is great (you know I love HYSAs), it isn’t as good as the expected long-term growth in the stock market.

If you don’t contribute it now, you still have plenty of time to add to your Roth IRA all the way until April of next year. You won’t have to worry about contributing it only to withdraw it again a few months later. 

As far as the gains, contributing now vs September is only the difference of 9 months. While time is one of the most important factors when investing, this isn’t a huge amount of time. 

Making Your Choice (And My Conclusion)

But back to “personal finance is personal.” You might have other reasons to lean one way. Maybe you want to try to force yourself to stick to a wedding budget (doesn’t sound like it, but maybe!). If you feel like the money is less “available” to you this way and that’ll help, then great.

In this situation, I don’t think there is a “right” or obvious choice. 

I know that feels like a cop-out. 

But in my work, I often find that people know what they want to do, but are afraid of making the “wrong” choice

My advice is to go with your gut. It sounds like you’re already doing lots of great things–you’re aware of the max contributions and thinking intentionally about your money for the year–and I, for one, trust you to make the right choices for you. 

While our choices matter, it’s more important to remember that you can’t perfectly optimize every decision, and the stress and pressure aren’t worth it even if you could. That goes for your money and your life.

Rooting for you 💛

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