Ah, retirement. Whenever you take a break during a sunny workday, you imagine how wonderful it’s going to be when you don’t have to head back to the office. When you’re retired and finally get to enjoy the day to yourself. The good news is, those days are closer at hand than you might think. The not-so-good news? You might not have the one account that experts like Suze Orman think is essential to a stable and comfortable retirement.
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For Orman, the most important retirement account anyone could have is the Roth IRA. Stereotypically, many people think that Roth IRAs are better suited for people in higher income brackets. However, Orman is quick to dispel that notion. She wants everyone to start a Roth IRA for their retirement — to the point where she’s famously said, “I don’t care what tax bracket you’re in. You’d have to be crazy to do anything other than a Roth retirement account.”
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Benefit From No Taxes on Your Gains
To Orman, one of a Roth IRA’s cardinal virtues is its tax-free growth. While you fund the account with after-tax dollars, similar to a standard savings or brokerage account, what sets the Roth IRA apart is that your investment gains aren’t taxed. As long as the account has been open for at least five years and you’re age 59½ or older, you can withdraw both your contributions and earnings completely tax-free. That means every dollar of growth — whether from interest, dividends, or capital gains — is yours to keep in retirement.
Conversely, investors in traditional retirement accounts can deduct the amount they contribute from their taxable income in the year of contribution. However, this perk comes with a catch: You can’t withdraw that money before age 59½ without facing penalties, unless you meet an exception. Then, when you do withdraw it, there’s another surprise (and not the good kind) — you’ll owe income tax on the entire amount, including both contributions and gains. Even good fortune, like a rising stock market, comes with a downside, as growth in a traditional account increases your future tax burden.
Take Advantage of Lower Tax Rates
Another myth that Orman and other Roth IRA evangelists want to debunk is the idea that opening a Roth should hinge on your current tax rate. The traditional logic is that if you’re in a high tax bracket now, you should defer taxes until retirement. If you’re in a lower bracket, it makes more sense to pay taxes upfront.
But this assumes the government will never raise taxes — a risky assumption. As Orman and other financial experts note, the government could raise taxes in the future, leaving those who deferred tax payments vulnerable. Also? Your own financial situation could change by the time you retire, potentially pushing you into a higher bracket than you expected.
You Can Start a Roth IRA for Loved Ones at Any Age
While some retirement accounts, like a 401(k) or 403(b), are tied to your job, a Roth IRA is more flexible. In fact, you can open a Roth IRA for the children in your life via a custodial account. Whether you’re a parent or a favorite aunt or uncle, or even a family friend, you control the account until the child reaches the age of majority — typically 18 or 21, depending on the state.
Like a regular Roth IRA, the annual contribution limit for a custodial Roth IRA is $7,000 for 2025, with one key restriction: The child must have earned income, and contributions can’t exceed that amount or the annual limit, whichever is less.
Kids can also open their own Roth IRAs once they start earning money. This income can come from a summer lifeguarding gig, a burger-flipping job, or even a dog-walking or babysitting arrangement. It doesn’t matter if they’re big earners — what matters is that they’re getting into the habit of saving early. The sooner they learn to save, the more time their investments have to grow.
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Bottom Line
Suze Orman, like other Roth IRA superfans, doesn’t want you to feel held back by income or age. Whether you’re a teen with a part-time job or an adult thinking about retirement, the best time to open a Roth IRA is now.
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This article originally appeared on GOBankingRates.com: Suze Orman: This One Retirement Account Is Essential for Everyone — Regardless of Income
