Best Time of Year to Contribute to an IRA
The start of a new year is the perfect time to resolve to maximize contributions to your retirement accounts before April. The sooner you can invest your IRA money, the more time it has to potentially grow through compounding . Consistency is key: even small, regular contributions add up over decades. You should be budgeting for IRA contributions throughout the year to ensure your savings continue to grow, but there’s a better time of year to put money into your IRA, and that’s right now.
Contribute to your retirement accounts now
Contributing early in the year gives your investment more time to potentially grow. By making an IRA contribution in January or February, that money can be invested and begin accumulating potential gains right away. The extra months of compounding can make a big difference over decades .
If possible, try to make IRA contributions early in the calendar year. The sooner you put your money into the account, the sooner it will begin to grow tax deferred. Making your contribution in January, February or March will maximize the time your money will be invested.
While January is a great time to contribute to an IRA, you can make contributions at any time throughout the year. Here are some other good times to consider adding money to your retirement account:
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After a bonus or tax refund. Got an influx of cash in the form of a work bonus or tax refund? Consider contributing some or all of the amount to your IRA to give your retirement savings a healthy boost. In the first few months of the year, people often receive lump sum payments that can be put directly into retirement accounts.
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When will your salary increase? If your salary increases, consider using all or part of the increase to increase your retirement contributions. This can be a relatively painless way to increase your IRA contributions over time without having a noticeable impact on your salary.
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By tax deadline. Technically, you have until the tax filing deadline (usually April 15) to make IRA contributions for the previous year. Please try to make your contribution before this date.
At least now it’s a fresh start to reaching your savings goals. The New Year brings a clean slate to achieve your financial goals. By making your IRA contribution a year in advance, you’ll use the momentum and enthusiasm to save money in 2024.
When it comes to retirement, the key is to start saving as early as possible (rules of compounding!) and use multiple accounts to build your retirement funds. Here are our guides to opening an IRA and opening a 401(k) .