✨ September Sale! ✨

All money courses are $30 off! Sale ends Sunday 9/22!

Using a Roth IRA to achieve financial freedom

The little sister in this post is a long-time PFC follower who shared this story with us. The names and some of the facts were changed to keep the post anonymous, but everything else is very real.

Contributing to a Roth IRA might not seem very exciting since you can only put in a relatively small amount. But starting early and doing it consistently each year can seriously accelerate your path to achieving financial freedom.

In our example, even though Mark didn’t start until he was 40 years old, the simple act of contributing to a Roth IRA every year allowed him to retire early with over a million dollars. He used this financial security to fulfill a lifelong dream of leaving city life behind and moving his family to a remote part of the country.

What is a Roth IRA? It’s a type of retirement account that allows you to contribute money that’s already been taxed. You can invest this money inside the Roth IRA and it doesn’t get taxed as it grows and it’s not taxed when you withdraw it.⁣‎ Usually when you make money on an investment the government wants a piece of the action! But that’s the beauty of a Roth IRA!

When Congress first created Roth IRAs you could contribute $2,000 a year. That number has slowly gone up over the years and now you can contribute $7,000 per year ($8,000 if you’re over 50). If you make over the income limit to contribute to a Roth IRA, you can use a “backdoor Roth IRA”. We have had other posts on this topic and we have an in-depth article on our website walking through the steps to do a “backdoor Roth IRA”.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎

-Vivi & Shane

MORE POSTS

Jeremy Circle

Hi, I’m Jeremy! I retired at 36 and currently have a net worth of over $4 million. 

Personal Finance Club is here to give simple, unbiased information on how to win with money and become a multi-millionaire!