Maximize Your IRA: Why Now Is the Perfect Time to Contribute
There’s an old saying about investing: The best time to start was yesterday. The second best? Today. When it comes to your IRA, you actually have a unique opportunity to do both.
Here’s why. Unlike employer-sponsored plans like 401(k)s, IRAs operate on their own timeline—one that works in your favor. Since you don’t file your 2024 taxes until 2025, the IRS gives you until April 15, 2025, to make contributions for the 2024 tax year. That means you can still invest in last year’s IRA while simultaneously funding your 2025 contributions.
Why Designate Contributions for 2024?
There are a few key reasons to take advantage of this window:
Maximize Your Contribution Limits
IRAs have strict annual caps—$7,000 for both 2024 and 2025, or $8,000 if you’re 50 or older. By allocating funds toward 2024 before the deadline, you free up additional room to contribute toward your 2025 limit.
Potential Tax Savings
If you have a traditional IRA, your 2024 contributions might be tax-deductible, reducing your taxable income. The deduction depends on whether you or your spouse are covered by a workplace retirement plan and your income level. (Already filed your taxes? No worries—you can amend your return.)
Leverage Compound Growth
The earlier your money is invested, the more time it has to grow. If you consistently invest $7,000 annually over 20 years and earn a 6% average return, your balance could reach approximately $257,000—with about $117,000 of that coming from investment gains. The sooner you start, the greater the potential payoff.
Taking the Next Step
If your employer offers a 401(k) with matching contributions, prioritize that first—it’s essentially free money. But if you’re looking for another tax-advantaged way to build your retirement savings, an IRA provides flexibility and long-term benefits.
The bottom line? There’s still time to make the most of your 2024 IRA contributions, so don’t leave this opportunity on the table. Your future self will thank you.