Best Ways to Save for Retirement

Retirement might sound like a long way off – especially when you have so many presentday expenses to think about. But the earlier you start saving for retirement, the more time that money has to grow. Even if you start small, consistent contributions can add up over time.

There are several ways to save for retirement, including employer-sponsored plans, individual retirement accounts, and other tax-advantaged accounts. The right strategy will depend on your income, expenses, employer benefits, financial goals, and how close you are to retirement.

In this guide, we’ll walk through some of the options to help you create a savings strategy that works with your budget and goals.

Employer-Sponsored Plans

One of the most common ways to save for retirement is through an employer-sponsored retirement plan. These plans allow you to set aside money from your paycheck and invest it for the future.

401(k)

A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their paycheck to the plan. Your contributions are generally invested in the options available through your plan, allowing your savings to grow over time.

With a traditional 401(k), your contributions are generally made before taxes are taken out of your paycheck. You typically don't pay income taxes on that money until you withdraw it in retirement.

Before you decide how much you’ll regularly contribute, consider your other financial priorities. A 401(k) isn’t like an ordinary savings account that you can withdraw money from at any time. There may be a penalty if you withdraw funds early.

403(b) & 457(b)

If you work for a public-sector organization, school, or certain nonprofit organizations, you may have access to a different type of employer-sponsored plan. For example, 403(b) plans are commonly available to employees of certain public schools and tax-exempt organizations, while 457(b) plans may be available to certain state and local government employees and nonprofit workers.

Roth 401(k)

A Roth 401(k) is another option that allows you to make post-tax contributions through your paycheck. Your earnings may grow tax-free, and qualified withdrawals in retirement are generally tax-free.

If you leave your job, you generally have several options for your retirement savings. Depending on your situation and the rules of your plan, you may be able to leave the money in your former employer's plan, roll it into a new employer's plan, or roll it into an IRA. Compare your options carefully before deciding what to do with the account.

Individual Retirement Accounts

An individual retirement account (IRA) is another way to save for retirement. Unlike an employer-sponsored plan, an IRA is an account you open and manage yourself through a financial institution. Anyone with earned income may generally be eligible to contribute to an IRA.

Traditional IRA & Roth IRA

Two common types are Traditional IRAs and Roth IRAs. A Traditional IRA offers tax-deferred growth, which means you don’t owe any taxes until you withdraw money during your retirement. A Roth IRA offers tax-free growth, and qualified withdrawals are generally taxfree if IRS requirements are met.

Each has an annual contribution limit. For 2026, the combined contribution limit for Traditional and Roth IRAs is $7,500. If you’re 50 or older, you can make an additional $1,100 catch-up contribution, bringing the total to $8,600.

Aside from contributing to the account, you'll also generally need to choose investments for the money inside the account, such as mutual funds, index funds, or target-date funds. Your investment choices can affect how your savings grow over time.

An IRA may be a useful option if your employer doesn't offer a retirement plan or if you'd like to save additional money for retirement outside of a workplace plan.

Self-Employed Retirement Plans

If you're self-employed, own a small business, or earn income through freelancing or contract work, you may have access to additional retirement savings options. Plans such as a SEP or SIMPLE IRA may allow eligible individuals to save more for retirement than a traditional IRA, depending on their income and circumstances. Consider reviewing the features and contribution limits of each option to determine which may best fit your needs.

Health Savings Accounts

A Health Savings Account (HSA) is primarily designed to help people with eligible highdeductible health plans save money for qualified medical expenses. However, an HSA can also play a role in your long-term financial strategy.

HSAs offer several tax advantages. Contributions may be tax-deductible, money in the account can generally grow tax-free, and withdrawals used for qualified medical expenses are generally tax-free.

Unlike a flexible spending account, you generally don't have to use all the money in an HSA by the end of the year. The money can remain in the account and remain available for future qualified medical expenses. An HSA also generally stays with you if you change jobs.

If your HSA allows you to invest some of your balance, you may be able to use it as another way to build long-term savings. Once you reach age 65, you can generally withdraw money from an HSA for non-medical expenses without the additional 20% tax that generally applies to earlier non-qualified withdrawals. However, those withdrawals are subject to ordinary income tax.

Because healthcare can be a significant expense during retirement, building HSA savings may help you prepare for those future costs while taking advantage of the account's tax benefits.

Tips to Make the Most of Your Savings

Take Advantage of an Employer Match

If your employer offers a retirement contribution match, this can be one of the most valuable benefits available to you.

Some employers will match a portion of the money you contribute to your retirement plan, either through partial matching or full matching. For example, an employer might contribute 50 cents for every dollar you contribute, up to a certain percentage of your salary.

If your budget allows, consider contributing enough to receive the full employer match if your plan offers one. According to research, 25% of workplace savers aren't maximizing their employer match. This is essentially free money, and it’s a great incentive to maximize your benefits.

An employer match can make it easier to grow your retirement savings because you're receiving additional contributions from your employer on top of your own. Check your plan documents to understand how your employer's matching contribution works, including any requirements or vesting schedule.

Automate Whenever Possible

One of the easiest ways to make retirement saving a habit is to automate your contributions.

Many employer-sponsored retirement plans allow you to have a percentage of each paycheck automatically deposited into your retirement account. Because the money is taken out before it reaches your checking account, you don't have to remember to make a contribution each month.

If possible, consider increasing your contribution rate when you receive a raise. Even small increases over time can make a meaningful difference in your retirement savings.

If you're having trouble finding room in your budget, start with an amount that feels manageable. You can increase your contribution later as your income changes, you pay off debt, or your other expenses decrease.

Don’t Delay Starting

If you haven’t started saving for retirement, all these plans can sound daunting. But don't let the number of choices keep you from getting started.

The earlier you start, the more opportunity your money has to grow over time through investment earnings and compounding. Essentially, your money will make money if you give it enough time.

The amount you can save will depend on your circumstances, but starting early can give your savings more time to grow. Even small steps can help you make progress.