Welcome back — today's post is about a decision I made this year that felt small at the time and is worth a lot more than it looks on paper.
What a Roth IRA actually is
A Roth IRA is a retirement account funded with money you've already paid taxes on, which means it grows completely tax-free, and withdrawals in retirement are tax-free too. There's no minimum age to open one beyond having earned income - a part-time job, an internship, or on-campus work all qualify. For 2026, the contribution limit is $7,500 a year if you're under 50, confirmed straight from the IRS's own announcement.
I opened mine at 20, not because I suddenly had a lot of extra money, but because I realized the account cared far more about time than it cared about the size of my first contribution.
What I actually did
I started with $100 a month. Nothing dramatic, nothing that required a big lifestyle change - just consistent and automatic. I didn't wait until I "had more to invest," because waiting for that moment is exactly the trap this page talks about constantly.
The real cost of waiting, in actual numbers
Here's the part worth sitting with. $100 a month invested from age 18 to 65 - a 47-year timeframe, at an 8% average annual return, compounded monthly - grows to roughly $621,000.
Now compare that to waiting ten years to start, at 28 instead of 18, and trying to make up for lost time by contributing more - $150 a month instead of $100, for the remaining 37 years. That path grows to roughly $407,000, despite the person contributing about $10,200 more out of pocket over their lifetime.
Same effort, more money put in, and still over $213,000 behind. The only real difference is time. Not income, not discipline - just the years compounding never got to work with.
There's an interactive version of this comparison below - hover any age to see exactly where each account stands.
This isn't just my math — it's the same pattern everywhere you look
I went looking for other people's version of this comparison before writing this, and it holds up everywhere it's been run. Fortune's breakdown of Roth IRAs for Gen Z found that investing $3,000 a year starting at 20 grows to over $850,000 by retirement, versus about $414,000 if you wait until 30 - and even a modest $1,000 a year (about $83 a month) starting at 20 can reach roughly $200,000 by 65. The exact numbers move depending on the contribution and the assumed return, but the shape never changes: the gap is never really about the size of the check, it's about how many years it had to compound.
That same piece cited Federal Reserve data showing the share of households in their 20s with a Roth IRA nearly tripled between 2016 and 2022 - up from 6.6% to 19.2%. More people our age are catching onto this than you'd think, even though the research also points out that only about 20% of Gen Z currently saves for retirement at all, mostly because nobody hands you a clear starting point. TIAA's research team makes the same case from the tax side: letting money grow completely tax-free for decades, starting in the years when your income (and tax rate) is lowest, is exactly why your 20s are the cheapest time you'll ever have to do this.
Why I didn't wait for it to feel "worth it"
If I'm honest, $100 a month didn't feel like enough to matter when I started. It's easy to assume a small contribution isn't worth the effort of opening an account, filling out the paperwork, picking an investment. But the math doesn't reward the size of your first contribution nearly as much as it rewards the size of your head start.
How to actually open one
If you have any earned income right now, you're eligible. Most major brokerages let you open a Roth IRA online in about ten minutes, with no minimum balance required at most of them. From there:
- Open the account, even before you're ready to contribute meaningfully.
- Automate a small, consistent contribution - even $25 or $50 a month.
- Choose a simple, broad index fund inside the account rather than trying to pick individual stocks.
- Let time, not timing, do the rest of the work.
The thread that connects it all
The years you spend waiting to feel ready are the years that cost you the most.
I didn't open a Roth IRA at 20 because I had it all figured out. I opened it because the years I would've spent waiting to feel "ready" are the years that would've cost me the most. That's the same idea this whole account keeps coming back to under a different name - the $213,000 gap above isn't really a market story, it's an opportunity cost story: the next-best use of the money you're not investing yet is usually just sitting there, not compounding. Whatever's real for you right now, even if it's $25 a month, is worth starting today rather than waiting for a bigger number that feels more impressive.
Hypothetical example for illustration only - assumes a fixed 8% average annual return compounded monthly, no missed contributions, and no withdrawals. Real markets don't move in a straight line, and past performance doesn't guarantee future returns. This isn't personalized financial advice. Talk to a licensed advisor about your own situation.
Sources & further reading
