How to Build Wealth the Easy Way - Using Roth IRA Tax Benefits in Your Favor
How Millennials Are Investing in Roth IRAs and Boosting Their Retirement Savings
Retirement seems like a dream you’re never going to see.
You’re doing everything your parents told you to do. You show up every day to a job you’re less-than-passionate about, climb the career ladder, and make it all work. But when your insomnia kicks in at 2 am, and you wonder if the tick of the living room clock has always been that loud, you fight to reassure yourself that this plan of yours is ever going to work out.
The age-old advice your parents gave you worked well for them, but you live in a different world. Instead of a pension with a gold watch, your world has layoffs and health insurance premiums more expensive than your car payment.
I wish someone had explained the Roth IRA tax benefits to me 20 years ago. The Roth IRA tax benefits for millennials are a cheat code that kicks your retirement savings into turbo speed. Find out what your peers are already doing – using the tax code to their advantage and watching their money balloon.
I learned this the hard way after making a mistake that cost me two decades of growth. But I’m not going to let that happen to you. Learn the strategy that proves why Roth IRAs are smart for millennials, no matter what your world looks like.
A millennial myself, I’ve used my skills as a personal finance coach to help my peers bridge the gap between our parents’ way of investing and finding realistic strategies that work today. The tips and tricks I send to my email subscribers show an easier path to growing their wealth, and it all starts with understanding what tools are available.
4 Reasons Why a Roth IRA Is My Favorite Retirement Account for Millennials
Chances are you’ve heard of this type of investment account before, but it faded into the background noise with the others. A Roth IRA is one of the best retirement accounts because you’ve already paid taxes on the money you invest, which means your money grows tax-free. It’s often the overlooked secret ingredient to investing. Welcome to the account designed to keep your wealth in your pocket.
The Roth IRA benefits that will fast-track your wealth are[1]:
1. Pay Now to Save Later
Paying taxes now on the money you’re investing vs. when you withdraw it later at a higher tax bracket will increase what you get to keep.
These benefits matter more than you think.
Fast forward to age 62 when your future self is ready to retire and withdraw your money. Taxes have increased – partly because of inflation and government policies – and because you earn more money than you did in your twenties. You’ve found yourself in a higher tax bracket.
Paying those taxes when you’re young means locking in your lower tax rate for decades. For example, in 2025, the average annual salary of a 22-year-old is $41,000, while the average 62-year-old earns $67,000.[2] That’s the difference between being in the 12% tax bracket and the 22%.[3] I don’t know about you, but I want to keep that 10% difference in my account.
2. The Money Is Yours. All Yours
We are all used to the feeling of getting the wind knocked out of our sails when we read fine print on the deal that seemed too good to be true.
Eliminate that fear with the Roth IRA.
One of my favorite benefits of the Roth IRA account is that the dollar amount you see when you check your balance is all yours. You don’t have to do the mental math to deduct a looming tax bill or worry about how much is really yours to keep.
Because of step 1, you’ve paid the taxes up-front, so nothing more is owed when you withdraw your money. No more guessing about the value in this account. No more cushioning your withdrawal to predict some unknown amount of taxes you’ll owe. Spend your money knowing Uncle Sam won’t have his hand out waiting for his payment.
3. It’s Available When You Need It
Life is unpredictable, and some people don’t like the idea of tying up their money in case they need it for an emergency.
Roth IRAs understand this and have built in the flexibility to access your contributions when life inevitably happens.
You can withdraw your contributions after 5 years penalty-free, or within 5 years for certain life circumstances.[4] A first-time home purchase, birth and adoption fees, qualified education costs, and medical expenses are among the reasons you can withdraw early while avoiding paying a penalty. This unique feature makes a Roth IRA your investment account with a safety net.
4. Stay Invested for as Long as You Wish
If you’re lucky enough to have a career you love, you may not want to withdraw this money for a while.
That’s perfectly fine.
When you owe taxes on money, the government wants its cut on its schedule – not yours. But since you already paid the taxes on the money before depositing into your Roth IRA, you don’t have any obligation to touch that account in a certain timeframe.
If you choose to keep working into your 70s, you are not required to withdraw your money with mandatory minimum distributions. Instead, your Roth IRA will wait for when you’re finally ready to leave a career you love. You get to decide the right time to access your money. A Roth IRA account puts you back in control of your financial decisions, no matter your situation.
Make Sure You Know the Requirements
Roth IRAs are special because of the tax-free growth and withdrawal flexibility. Other retirement accounts offer different tax benefits, but cannot match those perks.[5] Open a Roth IRA alongside an employer-sponsored retirement account, and you have a winning strategy that will provide flexibility and security in your retirement years.
Of course, to enjoy the benefits of your Roth IRA, you must follow some rules:
The money you contribute must live in the account for 5 years.
Contribution limits. The Roth IRA contribution limit for young professionals is $7,000 for 2025 ($8,000 if you are 50 years or older).
Contribution limits are phased down if your annual salary is more than $150,000.
If you are a millennial still building your career, chances are that you are in the exact sweet spot to take advantage of contributing to a Roth IRA. However, if your current annual salary exceeds $150,000, learn which contribution limits apply to you.[6]
What I Wish I Knew 20 Years Ago
I wish someone had explained why a Roth IRA is an amazing investment account to me decades ago. You see, I knew I should be investing in one, but I didn’t understand why. That lack of urgency led me to my biggest financial blunder.
When I was in my early twenties, I opened an account and invested some money.
Or I thought I had.
As it turned out, my balance ended up in a money market account and was not invested. My non-tech-savvy self convinced me it would take hours to learn the investment process online, so I put it off.
And kept putting it off.
That money sat there for twenty years while my employer-sponsored retirement accounts were growing with the market. I finally forced myself to sit and deal with it. Imagine my shock when it took me less than 10 minutes to set up investments that could have been working for me for two decades.
If I had invested in a basic S&P 500 index fund, my money would have quadrupled in those 20 years. That’s not nickels and dimes – that’s the difference between retiring in style and barely scraping by.
Ready to Set It Up? Let’s Do It!
Let me break down exactly what you need to do to start building your wealth.
First, pick a financial platform – Fidelity, Vanguard, and Schwab are all reputable choices that millions of people use.
Link your bank account, and transfer money in.
Once you have funded the account, make sure you invest that money. To avoid decision overwhelm, I stick with investing in index funds – mirroring the S&P 500. This allows you to choose a well-balanced option that doesn’t ask you to be a stock market expert.
Keep investing consistently. Because you started early, you can keep your contributions small – years of growth will turn that little bit into a lot.
Learning how millennials can invest in a Roth IRA doesn’t need to take decades. It doesn’t force you to learn bro-finance talk. You simply need to take those four simple steps today.
Take it from me – don’t wait 20 years to finally invest in the account that will kick that stress-induced insomnia to the curb. Enjoy the Roth IRA tax benefits and sleep well knowing you’ve opened a retirement account where the balance you see is actually the amount you get.
I believe with the right knowledge, you can achieve your financial goals – which is why I take pride in delivering insights and encouragement to those enrolled in my email list. Subscribe to receive updates from me and learn more strategies that move you closer to your personal financial freedom.
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