Is there a better investment strategy than just a Roth IRA?

General
1

My wife and I want to start investing for her. I’m 100% disabled through the VA, so I essentially have my retirement sorted. I’m also employed, and so is she. I’m planning to invest for her because I’ll probably pass away first. She will have around 30 years to invest. We were thinking about starting an IRA this December so we can contribute again in 2025. But is there a better way than just putting 6k into a Roth each year?

2

Why put only $6k into a Roth IRA when you can actually put $7k in if you’re under 50? If you and/or your wife earned at least that much last year, you can contribute up to $7k (or your earned amount) for 2024 until April 15, 2025.

3

@Logan
Oh, we can contribute for 2024 until April 2025?

4

Jensen said:
@Logan
Oh, we can contribute for 2024 until April 2025?

Yes, that’s right. The deadline for contributing to a Roth IRA is the tax filing deadline for the following year (excluding extensions). So, for 2024, the deadline is April 15, 2025. More info here.

5

@Logan
Ah yes, that makes sense.

6

[deleted]

7

Peyton said:
[deleted]

VOO, VTI, VEO, and just let it sit.

8

It depends on the total income you and your wife made when it comes to an IRA.

9

Freddie said:
It depends on the total income you and your wife made when it comes to an IRA.

My VA disability is non-taxable. We meet the income limits.

10

Freddie said:
It depends on the total income you and your wife made when it comes to an IRA.

Worst case, use a backdoor Roth IRA, assuming you don’t have other traditional IRA assets.

11

  1. Putting the money into an IRA is just the first step. If you don’t invest it in something, it’ll just sit in a money market fund earning very little. Getting started - Bogleheads has some great free resources to learn about investing. After reading and watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. I retired at 57. Investing doesn’t have to be complicated or expensive; simple and cheap works best.

  2. By the time they retire, most Americans should have part of their assets in traditional accounts. Figuring out the best mix for you can be tricky. Many retirees get income from Social Security, which gets special tax treatment. Worst case, 85% of it is taxable. Best case, none is taxable. If you have no other income, it’s hard for taxable Social Security income to exceed the standard deduction. So, many people can have non-Social Security income that isn’t taxed, and for many, that income comes from a traditional IRA. I didn’t pay taxes on my 401k contributions or when I take money out of my IRA.

If your disability benefits count as Social Security, you might want to make your IRA all traditional. If not, you might want all Roth.

12

The easiest way is to choose a target date fund and just put money into it. The Roth IRA annual limit is $7,000 ($8,000 if you’re over 50).

13

Jace said:
The easiest way is to choose a target date fund and just put money into it. The Roth IRA annual limit is $7,000 ($8,000 if you’re over 50).

My 401k is in a target date fund. I think it’s Vanguard 2055.

14

A traditional IRA is usually better than a Roth IRA in most cases.

15

Rowan said:
A traditional IRA is usually better than a Roth IRA in most cases.

How is that?

16

Better than a Roth IRA… try the Megamillions or Powerball.