How do you prioritize retirement accounts?
Let’s start with a chart breaking down the best order of operations for saving for retirement.
- Step 1 – Save in Your 401k (Up To The Match)
- Step 2 – Save The Max In Your IRA.
- Step 3 – Continue To Max Your 401k Contributions.
- Step 4 – Max Your HSA.
- Step 5 – Side Hustle And Do A SEP IRA.
What can you do to maximize your retirement account?
Consider the following tips, which can help you boost your savings — no matter what your current stage of life — and pursue the retirement you envision.
- Focus on starting today.
- Contribute to your 401(k)
- Meet your employer’s match.
- Open an IRA.
- Take advantage of catch-up contributions if you are age 50 or older.
Should I prioritize 401k or Roth?
First, you should save in your 401(k) enough to get the employer match as a starting point. Next, once you have received the full match it can make sense to look at diversifying your taxes by using a Roth IRA if you meet the income limits. If not, consider saving in your 401(k) Roth if your employer offers that option.
7 Tips To Maximize Your Retirement Savings
- Start today.
- Automate your contributions.
- Use your employer match.
- Use an IRA.
- Add catch-up contributions to your account.
- Consider taxable investment accounts in your strategy.
- Start planning when you’ll withdraw money from your nest egg.
Can I contribute to traditional IRA if I have a 401k?
Short answer: Yes, you can contribute to both a 401(k) and an IRA, but if your income exceeds the IRS limits, you might lose out on one of the tax benefits of the traditional IRA. (Even if you’re ineligible to deduct your IRA contribution, you can still contribute to an IRA. Read more about nondeductible IRAs.)
What is the best order to withdraw retirement funds?
Traditionally, many advisors have suggested withdrawing first from taxable accounts, then tax-deferred accounts, and finally Roth accounts where withdrawals are tax-free. The goal is to allow tax-deferred assets to grow longer and faster.
