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 very slowly gone up over the years and now you can contribute $6,500 per year ($7,500 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

#rothira #spotlight #retirement #retireearly #indexfunds #sister #saving #investing #wealth #family #retirementsavings #personalfinance #money101 #investingtips

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By: Shane Sideris
Title: Using a Roth IRA to achieve financial freedom
Sourced From: www.personalfinanceclub.com/using-a-roth-ira-to-achieve-financial-freedom/
Published Date: Tue, 30 May 2023 14:47:13 +0000

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