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Ira contribution limit 2026 $7,500: The IRS has set the 2026 IRA contribution limit at $7,500, and it raises a simple but important question that if you actually saved that amount every year, how much money could you end up with by retirement.

IRS Sets 2026 IRA Contribution Limit at $7,500: How Much You Could Save by Contributing $625 a Month

To get a clearer picture, imagine someone starting at age 27 and saving $7,500 every year, about $625 a month, until age 67, and to simplify, this example assumes the contribution limit never rises and there are no catch-up contributions, as per an Investopedia report. It also assumes the money is invested in a Roth IRA, meaning contributions are taxed upfront but withdrawals in retirement are tax-free.

S&P 500 Index Fund Savings Could Grow to $1.38 Million

From there, the outcomes depend heavily on how the money is invested. You can look at two basic versions: putting everything in an S&P 500 index fund, or taking a more conservative route with a 60/40 portfolio of stocks and fixed-income assets. These examples use long-term, inflation-adjusted historical returns, though those aren’t guarantees for the future.

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If every dollar went into an S&P 500 index fund, the nest egg could grow surprisingly large. Based on the index’s inflation-adjusted return of 6.69% from 1957 to 2025, the account could reach roughly $1.38 million by age 67, as per the report. That illustrates the long-term power of compounding—though it also means living with more dramatic ups and downs in portfolio value along the way.

Choosing the more balanced 60/40 approach results in a much smaller amount at retirement. Using the portfolio’s historical inflation-adjusted return of 4.89% from 1901 to 2022, the balance would end up just over $882,000. That difference shows how choice of investment strategy can meaningfully change your final retirement total.

Is $882,000 or $1.38 Million Enough to Retire

Of course, the bigger question is whether $882,000, or $1.38 million, would be enough to live on. That depends on lifestyle, spending, and how much additional income someone expects from sources like Social Security.

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How the 4% Rule Helps Estimate Retirement Income

One common tool experts use is the 4% rule, created in the 1990s by financial planner Bill Bengen, as per the Investopedia report. It suggests withdrawing 4% of your portfolio in the first year of retirement and adjusting that amount each year for inflation, assuming the portfolio contains both stocks and bonds.

Under that rule, someone with $882,000 could withdraw $35,280 in the first year of retirement, as per the report. Add the average Social Security benefit, about $2,000 a month, and total annual income would top $59,000, which is just under what the average person 65 and older spends each year.

If the portfolio reached $1.38 million, the first-year withdrawal would jump to $55,200. Paired with average Social Security benefits, retirement income would rise to more than $79,000 a year.

Why a Full-Stock Portfolio Adds More Retirement Risk

There is one important caveat because the 4% rule assumes a mix of stocks and bonds, following it with a portfolio that’s fully invested in stocks comes with added risk, as per the Investopedia report. A market drop early in retirement could force someone to withdraw more of their savings than planned.

FAQs

What is the new IRS IRA contribution limit for 2026?

The limit is $7,500 per year.

How much would I be saving each month to hit that limit?

You’d need to contribute about $625 per month.