Oftentimes people wait until the deadline to contribute to an IRA – around the April 15 tax filing deadline after the taxable year. But you could accelerate the savings process by contributing during the current tax year instead of at the deadline in the following year.

For instance, if you start contributing $7,000 to your plan a year earlier, that essentially puts an extra 7,000 into your IRA, and starts the investment process, well, a year earlier! This could potentially add tens of thousands of dollars to your retirement account over your lifetime. (See: IRA Contribution Rules and Limits)

Below are two examples of the additional amount you could earn over the long term by not waiting to invest, based on a 5% annual return and a 10% annual return.

Whether you invest the maximum amount allowed ($6,500 for those under age 50 in 2023 and $7,000 in 2024) or a lesser amount, starting a year earlier may have a significant impact on your total savings over the long term. In the following illustrations, we show the impact that earlier contributions would have for an investor who contributes $7,000 a year.

As a hypothetical example, at an average annual return of 5%, after 10 years of $7,000 annual contributions, your pre-tax value would have grown to $92,448—that’s $11,403 more than your account would be worth if you had started a year later. And as the table below shows, after 40 years, the returns from the early investment would have added $49,280 to the total pre-tax IRA savings.

The difference would be even more significant for someone earning 10% per year. In fact, after 40 years, returns from the early investment would have added more than $300,000 to the total pre-tax IRA balance:

Opening an IRA can help you get started on a lifetime retirement savings plan for the future. To sweeten the pot, you may be able to realize significantly greater savings simply by contributing to your plan early in the current tax year instead of a year later at the contribution deadline.