Which Accounts Should You Use for Retirement?

With so many choices, it can be hard to know where to put your hard-earned money. 

Here’s a closer look at the five accounts we recommend for your retirement savings.

Employer-sponsored retirement plan—401(k), 403(b), 457(b) or Thrift Savings Plan

  • How does it work?

    Invest pre-tax Tooltip or after-tax Tooltip Roth dollars directly from your paycheck for retirement. Your employer might match contributions, up to a certain amount. If you make after-tax Roth contributions, any matching will go into a separate pre-tax account.

  • How should I use it?

    Contribute at least enough to get the full match, if your employer offers one. Increase your contributions 1%-2% each year until you reach the max.

Am I eligible?

If you’re enrolled in a high deductible health plan, you might be eligible. After age 65, you can’t contribute. But you can still use the money in your account.

How much can I contribute in How will it be taxed? 2019?

Up to $7,000 for families. Up to $3,500 for individuals.

Starting the year you turn 55, you can also make a catch-up contribution of $1,000.amount. If you make after-tax Roth contributions, any matching will go into a separate pre-tax account.

How will it be taxed?

Your money grows tax-free. If you use it for qualified medical expenses, you won’t owe federal taxes on it when you take it out.

After age 65, you can use the funds for non-medical costs without the 20% penalty—you’ll just owe ordinary income tax.

Eligibility, contribution limit and tax information

Health Savings Account (HSA)

  • How does it work?

    Set aside tax-free (pre-tax) dollars for qualified medical expenses. Tooltip

    Most HSAs also let you invest your savings.

  • How should I use it?

    Use it to save for health care costs, before and during retirement.

Show eligibility, contribution limit and tax information

Traditional IRA

  • How does it work?

    Invest pre-tax or after-tax dollars for retirement.

  • How should I use it?

    Consider it if you’ve maxed out your employer plan or don’t have one.

Show eligibility, contribution limit and tax information

Roth IRA

  • How does it work?

    Invest after-tax dollars for retirement.

  • How should I use it?

    Consider it if you’ve maxed out your employer plan or don’t have one—and expect to be in a higher tax bracket in retirement.

Show eligibility, contribution limit and tax information

Brokerage

  • How does it work?

    Invest in stocks, Tooltip   ETFs, Tooltip   mutual funds, Tooltip bonds Tooltip  and other assets.

  • How should I use it?

    Consider it if you want to save more after maxing out your employer and IRA accounts, or to save for non-retirement goals.

Show eligibility, contribution limits and tax information


What you can do next