The retirement account landscape can feel like a confusing array of acronyms\u2014401(k), IRA, HSA, and more. If you’re new to this, as I was when I first started working, it can be overwhelming. Fortunately, there is a clear order of operations for saving for retirement that works for everyone, regardless of income or status.<\/p>\n
While you may not have access to every type of account listed, the order remains the same; you\u2019ll simply skip a step. By following this order of contributions, you\u2019ll be well on your way to a secure retirement.<\/p>\n
Here\u2019s the recommended order:<\/p>\n
- \n
- Contribute to a 401(k) up to the company match<\/li>\n
- Contribute to a Traditional or Roth IRA to the annual limits<\/li>\n
- Contribute to a Health Savings Account<\/li>\n
- Contribute to a 401(k) up to the annual limit<\/li>\n
- Contribute to a SEP-IRA<\/li>\n
- Contribute to a taxable brokerage account<\/li>\n<\/ol>\n
Keep in mind that while you may not have access to each account (or may have a different type), following this order will keep you on track.<\/p>\n
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<\/figure>\n\nTable of Contents<\/summary>\n
- \n
- 1. 401(k) up to match<\/a><\/li>\n
- 2. Traditional or Roth IRA<\/a><\/li>\n
- 3. Health Savings Account<\/a><\/li>\n
- 4. Maximize your 401(k)<\/a><\/li>\n
- 5. SEP-IRA<\/a><\/li>\n
- 6. Taxable Brokerage Account<\/a><\/li>\n<\/ol>\n<\/details>\n
1. 401(k) up to match<\/h2>\n
- \n
- 2025 annual contribution limit:<\/strong> $23,500<\/li>\n<\/ul>\n
Many employers offer a retirement account match to encourage saving for retirement. The most common plans are 401(k) and 403(b) accounts, the latter being for non-profits and educational institutions. Aim to contribute as much as you can up to the match. For example, my first employer, Northrop Grumman, offered a 50% match on the first 6% of contributions, meaning that by contributing 6% of my salary, I received an additional 3% from the company.<\/p>\n
Be sure to check the vesting period if you plan to change jobs. This is the time you must wait before the employer match is yours to keep; however, your contributions are always yours.<\/p>\n
2. Traditional or Roth IRA<\/h2>\n
\ud83d\udcdd The IRS defines an IRA as an Individual Retirement Arrangement, but it\u2019s commonly referred to as an Individual Retirement Account.<\/p>\n
- \n
- 2025 annual contribution limit:<\/strong> $7,000<\/li>\n
- 2025 catch-up contribution for ages 50+:<\/strong> $1,000<\/li>\n<\/ul>\n
After maximizing your 401(k) match, the next step is to contribute to an IRA. There are two types:<\/p>\n
- \n
- Traditional IRA<\/strong> \u2013 Contributions are tax-deductible, and the account grows tax-free, but you\u2019ll be taxed upon withdrawal in retirement.<\/li>\n
- Roth IRA<\/strong> \u2013 Contributions are made after-tax, allowing the account to grow tax-free, and withdrawals are also tax-free in retirement.<\/li>\n<\/ul>\n
Both types have shared annual limits and income-based contribution limits. The Roth IRA is particularly appealing<\/a> due to its tax-free growth and withdrawals.<\/p>\n
3. Health Savings Account<\/h2>\n
- Roth IRA<\/strong> \u2013 Contributions are made after-tax, allowing the account to grow tax-free, and withdrawals are also tax-free in retirement.<\/li>\n<\/ul>\n
- 2025 catch-up contribution for ages 50+:<\/strong> $1,000<\/li>\n<\/ul>\n
- 2025 annual contribution limit:<\/strong> $7,000<\/li>\n
- 2. Traditional or Roth IRA<\/a><\/li>\n
- 1. 401(k) up to match<\/a><\/li>\n