Retirement
The goal with the longest timeline - which is exactly why starting early does so much of the work for you.
Last reviewed September 2026
Retirement by the Numbers
Contribution limits for tax year 2026. The IRS updates them every fall.
What you can put in from your paycheck. Age 50+ can add $8,000 more, and ages 60-63 can add $11,250 instead. If you earned over $150,000 in 2025, catch-up contributions must go in as Roth.
Source: IRS Notice 2025-67
Your contributions plus your employer's combined (not counting catch-up). Only matters if your employer is generous or your plan allows after-tax contributions.
Source: IRS Notice 2025-67
Shared across all your traditional and Roth IRAs combined. Age 50+ can add $1,100 more. Separate from the 401(k) limit - you can do both.
Source: IRS Notice 2025-67
$8,750 for family coverage, plus $1,000 at 55+. Requires a high-deductible health plan. After 65 it works much like a traditional IRA for non-medical spending.
Source: IRS Rev. Proc. 2025-19
Core Concepts
Seven ideas that cover most of what you need to get started.
Get the full employer match
Many employers match part of what you put in a 401(k) - for example, 50 cents per dollar on the first 6% of your salary. That's an immediate 50% return on that money. Once you're ready to invest, contribute at least enough to get the whole match.
Time does most of the work
At a 7% average return, money roughly doubles about every 10 years. A dollar invested at 25 has about four doublings before 65; a dollar invested at 45 has about two. Starting small and early often beats starting big and late. These are averages - real returns vary a lot year to year.
Traditional vs Roth
Traditional contributions lower your taxes now, and you pay tax when you withdraw in retirement. Roth contributions are taxed now, and withdrawals in retirement are tax-free. Roughly: if you expect a higher tax rate later, Roth wins; lower later, traditional wins. Many people split between both.
A common order to fill accounts
Once high-interest debt is paid off and you have an emergency fund (see why that comes first): 1) 401(k) up to the full match. 2) An HSA, if you have a qualifying health plan. 3) A Roth or traditional IRA. 4) Back to the 401(k) toward the limit. 5) A regular brokerage account. A common overall target is around 15% of gross income, including the match.
What to invest in inside the account
A 401(k) is just a container - the money still has to be invested. A low-cost target-date fund (pick the year closest to when you'll retire) automatically holds a mix of stocks and bonds and gets more conservative over time. Check the expense ratio - lower is better.
How much is "enough"?
A widely used rule of thumb is the 4% rule: withdrawing about 4% of your savings in the first year of retirement, then adjusting for inflation, has historically lasted about 30 years. Flip it around and you need roughly 25 times the yearly spending your savings must cover, after Social Security.
Shift toward safer assets as retirement gets closer
When retirement is decades away, a mostly-stock portfolio makes sense - you have time to wait out crashes. As the date approaches, slowly move part of it into less volatile assets like bonds and cash equivalents. A big drop right before or just after you retire is the most damaging, because you'd be selling to cover living costs while prices are down. Do it gradually over the last 10-15 years rather than all at once, and don't go entirely to cash - retirement can last 30 years, so part of the money still needs to grow. Moving money between funds inside a 401(k) or IRA doesn't trigger any tax. A target-date fund does this shift for you automatically.
Compare Accounts
The main places to save for retirement. For the tax details and the tax code behind them, see Tax.
| Account | Who can use it | 2026 limit | Tax break | Good to know |
|---|---|---|---|---|
| Through your job | ||||
| 401(k) / 403(b) | Employees whose employer offers one | $24,500 | Traditional (now) or Roth (later), if the plan offers Roth | Often comes with an employer match. Fund choices are limited to what the plan offers. |
| HSA | Anyone on a high-deductible health plan | $4,400 / $8,750 | Tax-free in, while growing, and out for medical costs | Doesn't have to be spent each year. Many people invest it and save receipts for later. |
| On your own | ||||
| Roth IRA | Anyone with earned income, below an income limit | $7,500 (shared) | Later - tax-free withdrawals in retirement | Your contributions (not earnings) can come out anytime, which makes it a flexible first account. |
| Traditional IRA | Anyone with earned income | $7,500 (shared) | Now - if you qualify for the deduction | The deduction phases out at higher incomes if you or your spouse have a workplace plan. |
| Solo 401(k) / SEP IRA | Self-employed people and small business owners | Higher - depends on business income | Mostly now; Roth options exist | Lets freelancers save far more than an IRA allows. |
| No special treatment | ||||
| Regular brokerage account | Anyone | No limit | None, though long-term gains get lower tax rates | No withdrawal rules, so it's useful for early retirement or goals before 59½ (or 55 - see the rule of 55 below). |
Key Terms
The words in your benefits paperwork.
At work
- Employer match
- Money your employer adds based on what you contribute, like "50% of the first 6%." Not contributing enough to get it all is leaving pay on the table.
- Vesting
- How long you must stay before the employer's contributions are fully yours. Your own contributions are always 100% yours.
- Rollover
- Moving an old 401(k) into a new employer's plan or an IRA when you change jobs, without paying tax.
Investing
- Target-date fund
- A single fund named for a retirement year (like "2060") that holds a stock/bond mix and gets more conservative as that year approaches.
- Expense ratio
- The yearly fee a fund charges, as a percent of your balance. Small differences add up to large amounts over decades - see the fee calculator on Stocks.
- Glide path
- The schedule for shifting from stocks toward bonds and cash as retirement nears. Every target-date fund publishes its own.
- Sequence-of-returns risk
- The danger of a market drop happening right when you start withdrawals. The same average return can leave you with much less if the bad years come first - the main reason to get more conservative near retirement.
- Catch-up contributions
- Extra amounts allowed above the normal limits once you turn 50.
Taking it out
- Age 59½
- Withdrawals from retirement accounts before this age usually owe a 10% penalty on top of any income tax, with some exceptions - like the rule of 55, below.
- Rule of 55
- If you leave a job (quit, laid off, or retire) in or after the year you turn 55, you can withdraw from that employer's 401(k) or 403(b) without the 10% penalty. Income tax still applies. It doesn't cover IRAs or plans from earlier jobs - rolling an old 401(k) into your current plan before you leave can bring it under the rule, while rolling to an IRA gives it up. Some public safety workers can use it from age 50, or after 25 years of service. Not every plan allows partial withdrawals, so check yours. Source: IRS, IRC §72(t)(2)(A)(v).
- Required minimum distributions (RMDs)
- Yearly withdrawals the IRS requires from traditional accounts, currently starting at age 73 (rising to 75 for people born in 1960 or later). Roth IRAs don't have them for the original owner.
- Full retirement age (Social Security)
- 67 for anyone born in 1960 or later. You can claim as early as 62 for a permanently smaller check, or wait until 70 for a bigger one.
401(k) Calculator
See what your 401(k) could grow to by retirement, how much of it comes from your employer, and what it might pay you each month.
The return and raise defaults are placeholders, not predictions. Simplified: a steady return every year (real markets swing), contributions added monthly, ignores taxes, vesting, and the yearly IRS limit (it warns if you're over the 2026 limit today), and the monthly income uses the 4% rule. Results update as you type.
A good credit score lowers the cost of nearly every loan you'll take before retirement - see Credit Score.