How Much Should I Contribute to an IRA and How Often?

Andrew Weber is a senior director of Planning Philosophy, Research and Guidance at Northwestern Mutual.

There’s no magic number when it comes to retirement savings, but the 2025 Northwestern Mutual Planning and Progress Study found that Americans expect to need $1.26 million to retire comfortably. An individual retirement account (IRA) can be a powerful tool that helps you supercharge your savings and secure some nice tax breaks. So how much should you contribute to a Roth IRA or traditional IRA per month? The answer comes down to your unique financial situation and retirement goals.

How does an IRA work?

An IRA is a tax-advantaged account that allows you to save for retirement. There are two main types of IRAs, and each one offers unique tax advantages. Understanding how they work can help you decide which one might be right for you.

Roth IRA vs. traditional IRA

Let’s take a closer look at how these two different IRAs work.

Traditional IRAs

Traditional IRAs allow for tax-deferred growth. Contributions are often tax-deductible today, but you’ll pay income tax when you withdraw that money in retirement. You can also expect a 10 percent early withdrawal penalty if you take money out of the account before age 59½. Required minimum distributions (RMDs) begin at age 72.

Roth IRAs

Roth IRAs are funded with money you’ve already paid taxes on, which means you can withdraw your contributions at any time without paying taxes or penalties. You can also tap your investment earnings tax- and penalty-free if you meet certain withdrawal requirements. A main benefit of a Roth IRA is that it can provide tax-free income in retirement.

How much should I contribute to an IRA?

Before turning to an IRA, many people choose to max out an employer-sponsored retirement plan first. That typically includes 401(k)s, which offer tax-deductible contributions and tax-deferred growth. Many companies also offer an employer match—free money you can put toward your nest egg.

Beyond that, consider the life you want to live in retirement. Some people want to travel, while others plan to golf daily or downsize to live closer to the grandkids. These decisions will impact how much you’ll need to save to support your retirement lifestyle.

How much will I need in retirement?

How much money you’ll need in retirement will depend on several factors, like the length of your retirement (when you exit the workforce and how long you live) and what you want that retirement to look like. According to the CDC, the average life expectancy is about 83 for men and 86 for women—but it’s impossible to know how long you’ll live. This unpredictable factor and others—like what market returns will be—can make it challenging to plan. Your financial advisor can help you estimate your retirement income for your desired lifestyle and account for these unknowns.

It’s important to remember that your savings probably won’t be your only source of retirement income. Social Security benefits, health savings accounts (HSAs), pensions, annuities and permanent life insurance could make up part of your retirement income.

To determine how much you need for retirement, it can help to work with a financial advisor. Your financial advisor can sit down with you and ask deep questions to learn about your short- and long-term goals. From there, they can build a plan tailored to you that ensures you’re saving the right amount—and in the right places—to get the retirement you want.

Roth and traditional IRA contribution limits

Tax-advantaged retirement accounts are great ways to save, but there’s a limit to how much you can kick in each year. In 2025, the contribution limit was $7,000 across all your IRAs (or $8,000 if you’re 50 or older). In 2026, those numbers jump to $7,500 and $8,100, respectively. You could be hit with penalties if you overfund your IRA. Also note that Roth IRA contributions phase out for higher earners.

Should I max out my IRA every year?

IRAs build wealth through the power of compound interest—so the more money you contribute, the more you stand to gain. This is why staying invested over the long term can be so useful. If you can afford to max out your IRA without neglecting your bills or other financial goals, it might be a good idea, depending on your goals.

Otherwise, you can set yourself up for success by reviewing your monthly budget and aiming to set aside 20 percent of your income for long-term goals like retirement. But if you have high-interest debt, you might want to contribute just enough to your 401(k) to secure an employer match, then prioritize that debt. According to the Federal Reserve, the average credit card APR as of Q3 2025 was 22.83 percent. Meanwhile, the stock market has generated average annual returns of roughly 10 percent (or about 6 to 7 percent after inflation), according to the U.S. Securities and Exchange Commission (SEC). That means there’s a pretty good chance that interest costs will outpace your potential investment gains.

But that doesn’t mean you have to neglect your retirement savings or other financial goals like paying student loans, building your emergency fund or saving for a big trip. Maybe instead of contributing $500 a month to an IRA, you bring it down to $250 while putting the difference toward your other goals.

Your financial advisor can work with you to build a plan that prioritizes what is important to you—using tools to grow and protect your money. And with the right plan, you can work toward short-term goals while setting yourself up well for the future.

When should I contribute to an IRA?

If you don’t have access to a retirement plan through your employer, or are self-employed, an IRA can be a great option—and the sooner you start saving, the better. With investing, time is your greatest asset. Let’s say you invest $10,000 and secure an average annualized return of 7 percent. Your balance would be worth:

• $19,000 after 10 years,
• $54,000 after 25 years and
• $149,000 after 40 years.

Keep in mind that the market may return more—or cause this value to go down—in a given year. But as you can see, long periods of time in the market can have a pretty big impact on growth. If you haven’t started saving for retirement yet, don’t worry. It’s never too late to start.

How often should I contribute to an IRA?

What matters most is making it consistent, and there are simple ways to make saving a habit. Consider taking advantage of automatic paycheck contributions if possible. Alternatively, you can set up automatic transfers from your bank account.

There’s an additional benefit, known as dollar-cost averaging.

This is when you invest the same amount in regular intervals, regardless of what’s happening in the market. If you want to max out your IRA in 2026, you could invest $7,500 all at once—or about $625 monthly. Investing in increments could help soften the blow if there’s a market downturn right out the gate. Dollar-cost averaging may also help you arrive at a better average price for your portfolio investments.

If you have the funds and can stomach a little volatility, historical data suggests that investing a lump sum tends to outperform dollar-cost averaging over the long run. Regardless, you’ll want to develop a consistent investment strategy that you can stick with over time.

Not sure where to start? Your Northwestern Mutual financial advisor can help. Your advisor will ask questions to get to know you and what matters most to you. Then they’ll help you build a plan to get there that includes strategies to grow and protect your money—including financial tools like IRAs. With a customized plan in place, you’ll be able to keep goals that matter to you now and in the future on track.

All investments carry some level of risk, including the potential loss of all money invested. Past performance is no guarantee of future performance. No investment strategy can guarantee a profit or protect against a loss.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.