When saving for retirement, starting as early as possible is ideal. But what if you're in your 50s, 60s, or even 70s? Can you still open a Roth IRA and benefit from its tax advantages? The good news is that you're never too old to open a Roth IRA, and depending on your situation, it might be a smart move—even if you're close to retirement or already retired.

A Roth IRA is a retirement account that lets your money grow tax-free. The key difference from a Traditional IRA is that you contribute after-tax dollars, meaning you don't get an upfront tax break. But in return, your qualified withdrawals are tax-free, which can be especially beneficial later in life.

Why There’s No Age Limit on Roth IRAs

One of the best things about a Roth IRA is that anyone with earned income can contribute—regardless of age. This makes it an appealing option for those who are still working later in life or want to take advantage of tax-free growth.

In fact, unlike Traditional IRAs, where you used to stop contributing at a certain age (now lifted), Roth IRAs don’t have any age restrictions. So whether you’re 50 or 70, as long as you’re still working, you can put money into a Roth IRA.

Key Considerations:

• Earned income: Contributions must come from earned income, like wages or self-employment. Social Security and investment income don’t count.
• Tax-free withdrawals: You can withdraw your contributions anytime without penalties, but to take out earnings tax-free, you need to be 59½, and the account must be at least five years old.

Is a Roth IRA Right for You Later in Life?

If you’re nearing retirement, you might be at an advantage. You could be holding back because you think there’s an age requirement for Roth IRA contributions, but in the later years of your career, you’re probably earning more than you did in your earliest years, when you might think you should have started your IRA. Even though you’re closer to retirement, a Roth IRA could still be a great fit. Here’s why:

Pros:

• No Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roth IRAs don’t require you to start withdrawing money at a certain age. That means your money can keep growing tax-free for as long as you like.
• Tax-Free Inheritance: If you’re thinking about leaving money to your heirs, a Roth IRA can be a smart way to pass on wealth. Your heirs won’t have to pay taxes on withdrawals, making it a more efficient way to transfer assets.
• Flexibility: There’s no age limit for contributions, so if you’re still working, you can keep adding to your account even in your 60s or 70s.

Cons:

• Less Time for Growth: Starting later means you have less time to grow your investments. Someone in their 20s has decades for compound interest to work in their favor, while someone starting in their 60s may not see the same level of long-term growth.
• The 5-Year Rule: No matter your age, the 5-year Rule applies. If you open a Roth IRA at 63, you’ll need to wait until at least 68 to withdraw earnings tax-free.

What’s the 5-Year Rule?

The 5-year Rule is important for anyone opening a Roth IRA later in life. It means that, even if you’re over 59½, you need to have held the Roth IRA for at least five years before you can withdraw earnings tax-free.

Example:

Say you open a Roth IRA at age 60 and make your first contribution in 2024. You would need to wait until 2029 to withdraw earnings tax-free, even though you’re over 59½. However, you can withdraw contributions anytime without taxes or penalties.

Income and Contribution Limits for Roth IRAs

Just because there’s no age limit doesn’t mean there are no other limits. Your ability to contribute to a Roth IRA depends on how much you earn and your tax filing status.

2024 Income Limits:

• Single filers: Contributions phase out between $146,000 and $161,000. If your income exceeds $161,000, you can’t contribute.
• Married filing jointly: Contributions phase out between $230,000 and $240,000.

If you earn more than these IRA income limits, you might consider a backdoor Roth IRA, which lets high earners convert a Traditional IRA into a Roth IRA.

Strategies to Maximize Your Roth IRA

Even if you’re starting late, there are still smart strategies to make the most of your Roth IRA.

Catch-Up Contributions

If you’re over 50, you can contribute an extra $1,000 on top of the standard $7,000 limit, making it $8,000 in total. This allows you to turbocharge your retirement savings during your peak earning years.

Roth IRA Conversions

If you’ve built up significant savings in a Traditional IRA or 401(k), converting part of that to a Roth IRA could make sense. While you’ll pay taxes on the converted amount now, you’ll enjoy tax-free withdrawals later, and you won’t have to worry about RMDs.

Final Thoughts

Whether you’re approaching retirement, still working toward it, or already retired, you can benefit from investing in a Roth IRA. As long as you’re willing to leave the money alone for at least five years, you can enjoy tax-free distributions starting at the age of 59½, regardless of when you put the money in. We suggest consulting with a Certified Financial Planner® to best assess your retirement situation and see if opening or converting to a Roth IRA may make sense in your particular circumstances.

Questions about your retirement accounts?

We're here to help make sense of it all.

Schedule your FREE consultation

Frequently Asked Questions

What is the 5-year Rule for Roth IRAs?

The 5-year Rule requires that a Roth IRA be open for five years before you can withdraw earnings tax-free, regardless of your age.

Is there an age limit for Roth IRA contributions?

No, there is no age limit. You can contribute to a Roth IRA at any age as long as you have earned income.

Can I contribute to a Roth IRA if I’m already on Social Security?

Yes, as long as you have earned income from wages or self-employment. Social Security benefits alone don’t qualify as earned income.

What is a backdoor Roth IRA?

A backdoor Roth IRA is a strategy that allows high earners to convert a Traditional IRA into a Roth IRA, bypassing income limits.

What happens if I convert a Traditional IRA to a Roth IRA?

You’ll owe taxes on the converted amount, but future withdrawals from the Roth IRA will be tax-free.