Most veterans know they should be saving for retirement. Few understand why the Roth IRA is the single best account they can use to do it.
This isn’t complicated. But getting it right early — especially in your 20s and 30s — creates a tax-free wealth engine that compounds quietly in the background while you build businesses and buy real estate.
Here’s what you need to know.
What Is a Roth IRA?
A Roth IRA is an individual retirement account you fund with money you’ve already paid taxes on. Your contributions grow tax-free. Your withdrawals in retirement are tax-free. You will never pay taxes on those gains — not when you’re 40, not when you’re 60, not ever.
Compare that to a traditional IRA or TSP, where you get a tax break now but pay taxes on every dollar you withdraw later. The Roth flips that equation — you pay taxes now while your income is relatively low, and you never pay taxes on the growth.
For veterans in their 20s and 30s, this is almost always the right move.
Why Veterans Are in a Uniquely Good Position
If you served on active duty in a combat zone, a portion of your income was tax-free. You can contribute that tax-free combat pay directly into a Roth IRA — meaning you pay zero taxes going in and zero taxes coming out. That’s as good as it gets.
Even outside of combat pay, most veterans entering the civilian workforce are in a relatively low tax bracket early in their careers. That’s the ideal time to use a Roth — pay low taxes now, never pay taxes on the growth later.
The Numbers
The 2025 contribution limit for a Roth IRA is $7,000 per year if you’re under 50.
If you’re 25 years old and contribute $7,000 per year every year until you’re 60, assuming a 10 percent average annual return — which is roughly the historical average of the S&P 500 — you’d have approximately $2.1 million. Tax free. Every dollar of it.
That’s the power of starting early.
What to Invest In Inside Your Roth IRA
Keep it simple. The goal is maximum growth over a long time horizon.
VTI — Vanguard Total Stock Market ETF — gives you exposure to the entire US stock market in one fund. VOO — Vanguard S&P 500 ETF — tracks the 500 largest US companies. QQQM — tracks the Nasdaq 100, weighted toward technology.
A simple three-fund portfolio of VTI, VOO, and QQQM covers the entire US market with a tilt toward high-growth technology companies. Set it, contribute every year, and don’t touch it.
Where to Open Your Roth IRA
Fidelity and Schwab are the two best options for most veterans. Both have zero account minimums, zero trading commissions, and excellent customer service. Fidelity edges out slightly for beginners due to its interface and educational resources.
Avoid using a financial advisor who charges a percentage of assets under management to manage a simple index fund portfolio. You don’t need that. Buy VTI, buy VOO, contribute every year.
Roth IRA vs Roth TSP
If you’re still on active duty or recently separated, you may also have access to a Roth TSP through the Blended Retirement System. The Roth TSP has much higher contribution limits — $23,500 in 2025 — and your contributions get matched by the government up to 5 percent.
The right answer for most veterans is both. Max the Roth TSP to capture the match, then open a Roth IRA and max that too. In 2025 that’s $30,500 in annual tax-free contributions.
That’s a serious wealth-building machine.
The One Thing to Do Today
Open a Roth IRA if you don’t have one. Go to fidelity.com, click Open an Account, choose Roth IRA, and fund it with whatever you can — even $500 to start. Then set up automatic monthly contributions so it happens without you thinking about it.
The best time to start was yesterday. The second best time is today.