As the Millennial Generation (those born from 1985-2004) finds its place in the working world, the pressure of the future is just on the horizon. With the burden of student loan and credit card debt, a tough economy, and low-paying jobs, retirement can seem just out of reach.

Not to fear! There is a way to start saving, no matter where you currently stand financially. By opening a Roth IRA or a self-directed retirement account, you can invest your hard-earned money for the future without breaking your bank now. If you’re a millennial, and are ready to start saving for your retirement, here are the top 11 benefits to opening a Roth IRA.


1. No Minimum Contributions


With an individual Roth IRA, account holders aren’t held to a set contribution amount. If you can’t afford to put a hefty sum away for your retirement, you can make small contributions and grow your retirement fund. Additionally, those from lower-income families can easily open a Roth IRA.


2. Tax-Free Withdrawals


Roth IRA account holders can contribute after-tax money today and withdraw their earnings tax-free. While you don’t get an up-front tax break, the benefit to owning a Roth IRA comes with any withdrawal after retirement. The IRS has no claim on them, so you can take out money without penalty.


3. Flexibility and Security


You can make withdrawals from your account penalty-free at any time. To take advantage of this, investors must be 50 ½ with an open account for five years. In addition to tax-free withdrawals at retirement, there are some instances that allow account holders to withdraw before without paying a penalty:

  • Buying your first home
  • Permanent disability
  • Unreimbursed medical expenses that exceed 10% of your adjusted gross income
  • Back taxes
  • Paying health insurance premiums while unemployed

While you should let your money grow, tax-free, in your account, it is comforting to know that you can use your money when you need it.


4. Protection Against Bankruptcy


While you don’t need an IRA to start saving, having a Roth IRA can protect your money as you save for retirement. An individual retirement plan is protected should you experience any financial mishaps. In these times, it pays to be prepared for anything.


5. Keep Contributing


With Roth IRAs, there is no minimum on the contributions you make. Additionally, you can keep contributing long past retirement. Traditional IRAs stop you from contributing to your account at age 70 ½. Roth IRAs have no set stopping point, so you can continue adding to your fund beyond the suggested age.


6. Roth IRA Estate Planning


Roth IRAs don’t just benefit you; they can benefit your loved ones as well! You can leave your Roth to a beneficiary and they can enjoy the benefits over their lifetime.



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7. You can easily convert.


If you make too much for a Roth IRA but want to enjoy the tax-free benefits, you can easily convert your traditional IRA. With the help of a tax professional, you can roll your contributions into a Roth IRA for the tax-free benefit. The cost is on the required taxes, and your earned income can continue to grow tax-free.



8. Long-Term Relationship


While you don’t get the upfront tax benefit, a Roth IRA can be a better option in the long run. If you don’t have the cash to contribute to an IRA, you can put your payments into the Roth and start saving now. This fund stays tax-free! So, regardless of your monetary position in the future, you will have the benefits of a Roth IRA.


9. You aren’t required to take contributions when you hit a certain age.


Unlike traditional IRAs, account holders do not have to withdraw money by a specific time. You can leave those funds to accumulate as long as you work. While you can enjoy tax-free withdrawals, if you choose to let your retirement fund grow for estate planning or for extra security, you are able to do so.


10. Income on the Rise


If you start young, your income is likely on the lower end, which allows you to open a Roth IRA without restriction. As you get older, your income is likely to rise. Your account will not change should you start to make more money. It is best to get a head start so you can enjoy the benefits of a Roth down the road.


11. Flexibility


The greatest gain with a Roth IRA is the flexibility it offers. You get to choose when you use your funds, and how much you’d like to save based on your income limit and personal retirement plan. You aren’t forced to withdraw at a certain age; you can keep making contributions and pass your account to your next of kin. Roth IRAs afford you the freedom to plan your retirement your way.


Saving For Retirement


The best way to start saving for retirement now is to have a plan. Roth IRAs are a flexible, tax-free solution that allows millennials to make contributions when you can afford to without penalty. As always, perform your due diligence before making any investment decisions and start saving today! Contact a trusted SDIRA Custodian today.