The Single Best Account to Grow Your Savings in 2024

You may have different goals or objectives you're currently trying to save for. And if any of those goals fall into the short-term category, then your best bet is to keep your cash in the bank, whether it's a savings account or a CD. You don't want to invest money you might need in a few years, because if the market performs poorly or experiences turbulence, you may not have enough time to ride out a downturn.

On the other hand, if you're saving for retirement, it's a good idea to invest your money to grow it into a larger sum over time. And you might as well choose an account that offers some nice tax benefits.

In that regard, you have choices. But it definitely pays to consider a Roth IRA.

Benefits galore

With a Roth IRA, you won't get a tax break on the money you contribute to your account. But you do get the benefit of tax-free gains in your account and tax-free withdrawals.

By contrast, with a traditional IRA, your money goes in tax free. However, withdrawals are taxed in retirement, and gains from your investments are taxed eventually (at the time you take your withdrawals).

Now, you've probably gone through periods in life when money has been tight. Many retirees feel that way all the time because, well, they're retired and aren't earning a paycheck. So having access to tax-free income is a great thing at a time like that.

Another thing you should know is that Roth retirement plans do not force you to take required minimum distributions (RMDs). To be fair, RMDs aren't a problem for many seniors, because they're already taking steady withdrawals from their retirement plans to cover their living expenses.

But let's say you decide to go back to work on a part-time basis as a retiree because you're bored, or because you want the financial security of earning a paycheck. You may find that between your wages and Social Security, you don't need to tap your retirement savings every year. With a traditional IRA, sorry, you have no choice.

But Roth IRAs don't impose RMDs, so you get the option to leave your balance alone as you see fit. That's important for two reasons.

First, if you don't take money out of your retirement plan, it can stay invested and continue to grow in a tax-advantaged manner. Also, if you want to leave an inheritance to your children or grandchildren, not having to tap your IRA makes that easier.

Consider a Roth IRA in 2024

While you have plenty of options when it comes to choosing a retirement plan, there's a lot to gain by putting your money into a Roth IRA. This year, Roth IRA contributions max out at $7,000 for savers under age 50 and $8,000 for those age 50 and over. If you're able to hit that max this year, you may be surprised -- in a good way -- at how much good it does for your finances.

Over the past 50 years, the stock market's average annual return has been 10%. If you put $7,000 into a Roth IRA this year, in 40 years, it'll be worth about $317,000 if your portfolio delivers that same 10% yearly return. And remember, that's just one year's contribution.

Of course, if you can't max out your Roth IRA this year, that's understandable and perfectly fine. But if you can save something, whatever amount you contribute has the potential to grow into a lot of money over time. And the best part? Whatever you gain in your account, the IRS won't get a dime of it.