"A traditional IRA allows you to contribute with pre-tax dollars and pay taxes on withdrawals in retirement, while a Roth IRA allows you to take tax-free withdrawals as a retiree, although you will have to contribute with after-tax dollars. Provided your income isn't too high, you can make tax-advantaged contributions to these accounts this year, up to a total limit of $7,500 if you're under 50 or a limit of $8,600 if you're 50 or older and eligible for catch-up contributions."
"You more than double your money over a decade when you contribute, and this single year of investing alone can go a long way towards helping you build a secure retirement. Given that the median 401(k) balance for Americans age 45-54 is just $67,796. Your single contribution could get you around 1/3 of the way towards the amount a typical middle-aged American has invested for their future."
"Here's how much money you'd end up with in a decade if you max out your 2026 IRA contributions The table below shows the amount that you would end up with in 10 years if you max out your IRA contributions, either with or without catch-up contributions. This assumes a 10% average annual return rate, which is about what the S&P 500 has consistently produced over time."
Traditional IRAs use pre-tax contributions and are taxed on withdrawals in retirement; Roth IRAs use after-tax contributions and allow tax-free withdrawals in retirement. Income limits determine eligibility for tax-advantaged contributions. Contribution limits for 2026 are $7,500 for those under 50 and $8,600 for those 50 or older with catch-up contributions. A single year of maxed contributions, invested with an assumed 10% average annual return, can more than double in ten years due to compound interest and tax-deferred or tax-free growth. A single maxed contribution can approach roughly one-third of the median 401(k) balance for Americans aged 45–54.
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