This Simple Strategy Could Make You a Roth IRA Millionaire Sooner Than You Think

The Roth IRA (individual retirement account) receives tons of praise because of its tax-free income perks during retirement. But if you’re on a mission to slam-dunk your retirement goals, building a million-dollar Roth IRA is the ultimate victory. There’s nothing like reaching retirement age and having over $1 million worth of assets that are 100% tax-free.

Accumulating a massive Roth IRA portfolio may seem impossible due to the annual contribution limits. However, Peter Thiel cracked the code with his $5 billion Roth IRA, and there’s a way you can tap into your million-dollar portfolio as well. We’ll dive into two simple steps you can take right now to ramp up your retirement savings.

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1. Follow the rules and maximize your contributions

Roth IRAs are an exclusive class of individual retirement accounts reserved for people who have earned income and fall under the annual income threshold. You can open an account on your own and fund it with after-tax dollars. By paying your tax bill up front, you get to collect tax-free benefits after you reach 59 1/2 and have satisfied the requirements of the five-year rule.

For 2022, you can only contribute up to $6,000 to your Roth IRA if you’re under 50. Once you turn 50, you can stash away an extra $1,000 into your account. If you’re aiming to get to $1 million, it’s best to contribute as much as you can every year. That could mean setting up recurring $500 transfers from your checking account to your Roth IRA every month. If you have a bonus coming your way, you can consider socking that money into a Roth IRA. After 12 months, you’ll have $6,000 tucked away in your account.

If you’re on the lower end of the income scale, you can still work toward a million-dollar Roth IRA. You may even qualify for a tax credit, known as the Saver’s Credit, when you make contributions to a Roth IRA. This could wipe out your tax bill and allow you to save more money for retirement.

Here are the income thresholds to unlock the 2022 Saver’s Credit.


Married Filing Jointly


Head of Household


All Other Filers


50% of your contribution

$0 to $41,000

$0 to $30,750

$0 to $20,500

20% of your contribution

$41,001 to $44,000

$30,751 to $33,000

$20,501 to $22,000

10% of your contribution

$44,001 to $68,000

$33,001 to $51,000

$22,001 to $34,000

0% of your contribution

Over $68,000

Over $51,000

Over $34,000

Data source: IRS.

2. Turn your contributions into investments

Let’s say you contribute $6,000 to your Roth IRA for 40 years. That’s equivalent to $240,000 worth of contributions saved. Maxing out your contributions is a great start to increase your retirement savings, but it’s not enough. It would take you more than 166 years to reach $1 million if you only contributed $6,000 every year and let the money sit in your account. There’s a faster way to achieve your goals, and that’s where investing comes in.

There are many types of assets you can buy with your Roth IRA funds, including:

Individual stocks
Mutual funds
Exchange-traded funds

You can also look into a self-directed Roth IRA to tap into alternative investments in your portfolio. Let’s say you build a diversified portfolio of assets based on your goals, risk tolerance, and age. It wouldn’t be far-fetched to aim for a 10% return, since the average annual return of the S&P 500 from 1926 to 2018 was around 7%.

Here’s an example of how you could get to the million-dollar mark if you start early and invest consistently:

Age: 21
Annual contribution: $6,000
Investment rate of return: 10%

At age 52, you’ll reach your $1 million victory, but you won’t be able to withdraw all your funds without penalty until you reach 59 1/2.

If you start contributing to a Roth IRA later in life, there’s still a chance to make your dreams come true. Here’s an example:

Age: 35
Annual contribution: $6,000
Investment rate of return: 10%

At age 66, you’ll be living the million-dollar tax-free dream.

Invest your way to success

It may be hard to believe that you could turn $6,000 contributions into $1 million, but investing gives you a chance to make that possible. The goal is to contribute as much as you can every year so your savings can work for you as return-generating investments.

Although your Roth IRA account may not go up in value every year, you’ll increase your chances of winning over the long term with a simple plan devoted to seeking out high-quality assets. So start allowing your money to work on your behalf and give your Roth IRA a chance to grow to the million-dollar mark before you retire.

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