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Opening a traditional individual retirement account (IRA) is one of the most popular ways to save for retirement because you can delay paying taxes on your investment earnings as long as you keep the money in the account.
Many people realize these accounts can be helpful at some point in their lives — but you might not be sure when opening an IRA makes sense. These accounts can potentially be useful at nearly every life stage, and there really is no "right" age to open one up.
Before Working Full-Time (22 & Younger)
There's no minimum age for opening an IRA. Students can open one for themselves, and parents can open an account on behalf of their young children. Getting such an early start can help make hitting retirement goals easier later on.
Younger people also need to remember you can only fund an IRA with earned income — money you get from work — and you can only add up to a maximum of $6,000 a year. Earned income could come from a summer job, babysitting, mowing lawns and so on. However, it can't come from a gift, an allowance or a similar source of income.
Early Career (22 to 35)
At the start of your career, saving for retirement is important, but you likely have plenty of other financial goals lined up — paying off student loans, saving for a house down payment and getting out of credit card debt to name a few.
It's okay if these might take up most of your budget. Luckily, you do not need a fortune to open an IRA. There's no minimum contribution required to open most IRAs. After that, you can add more on your schedule. For example, if you start to contribute to an IRA but want to pay for a car, you can pause payments then contribute again in the future.
The earlier you start investing, the easier it generally is to reach your retirement goals. Every dollar you save at the start of your career has more opportunity to grow. Opening an IRA now and contributing even a small amount can help.
Prime Working Years (35 to 60)
This is when people typically start thinking about opening an IRA and with good reason. You're in your prime earning years, so you likely have the money to tackle this goal. At this stage of your life, it's generally a good idea to start saving as much as possible for retirement.
One goal is not only to open an IRA, but also to contribute the maximum amount possible each year. As of 2022, you can contribute a maximum of $6,000 a year when you're younger than 50 and up to $7,000 a year if you're 50 or older, according to the IRS.
If you do choose to max out every year, remember that if you fall short you can't make up contributions later, due to IRA contribution limits.
Approaching Retirement (60 & Up)
The IRA retirement age is 59½. This is when you can start making retirement withdrawals from the account without a tax penalty. But people are living longer and working later in life, which means you may want to keep saving past age 60.
To open and add money to an IRA during retirement, you must have earned income from some type of work. Social Security payments, investment income and pension income don't count.
Traditional or Roth IRA
You can contribute to your traditional IRA in the year you reach age 70½ and beyond, as long as you have earned income. You can also contribute to a Roth IRA, which doesn't have a maximum age limit.
At this stage, adding money to a Roth IRA not only saves for your future but is also an way to leave an inheritance for others. Your investments will grow tax-free in a Roth IRA, and when your family inherits it, the earnings will still be tax-free. If you ever need money for yourself, you can make withdrawals from your Roth IRA whenever you want (though you may still be taxed if you haven't funded the Roth IRA for at least five years or are under 59½).
In the end, there is no age limit for when to open an IRA. Whether you're nine or 90, the IRA decision comes down to how well it matches up with your current financial goals.