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Planning for retirement

Which account types should you use to save?

Employer plans, IRAs, and taxable accounts can all be used for retirement saving. Here's how you can get the most benefit.
5 minute read

1. Save up to the match in your employer plan

If your employer offers a retirement plan (like a 401(k) or 403(b) plan) and will match your contributions up to a certain percentage, make sure you get the full amount of free money that's available to you.

GOOD TO KNOW

Over 96% of the retirement plans covered in a recent Vanguard study featured employer contributions. Make sure you enroll in yours!

Source: Vanguard, How America Saves 2018. This study examined employer retirement plans (and their participants) managed by Vanguard.

2. Open an IRA

It's great if you can save more than what's needed to get the maximum company match in your employer plan.

Opening an IRA for your additional savings will give you a chance to shop around. You can hold many types of investments in an IRA, including any mutual fund, ETF, stock, or bond—many of which might cost less than those offered through your employer plan.

And you can use a Roth IRA to save money that won't be subject to taxes in retirement—an option that isn't available in many employer plans.

The annual contribution limit for IRAs is $6,000 for most people, although it depends on your income. (If you're age 50 or over, you can contribute up to $7,000.)

Find out more about IRAs

GOOD TO KNOW

If you have an employer-sponsored plan from a previous job, rolling it over to an IRA can give you additional flexibility and make your portfolio easier to manage.

See whether a rollover could be right for you

3. Max out your contributions to your employer plan

After you've saved up to the match in your employer plan and maxed out your IRA, go back to your employer plan. The annual limit for employee contributions is $20,500 ($27,000 if you're age 50 or older and your plan allows catch-up contributions.)

4. Continue saving in a taxable account

For most people who want to save even more, the next step is to save in a general investment account.

These accounts won't have the tax breaks associated with retirement accounts, so you'll have to pay investment taxes on interest, dividends, and capital gains as your account grows, and you won't receive any tax deductions for your contributions.

Open a retirement account

We offer several types of accounts you can use to save for retirement. Figure out which one is right for you.

Find the right retirement account for you

Get your retirement plan

LET VANGUARD DIGITAL ADVISOR® BE YOUR GUIDE

Vanguard's robo-advisor makes staying on track to your retirement goal simple—through automated, personalized investing.

See how Digital Advisor can work for you


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We're here to help

Talk with one of our investment specialists

Monday through Friday
8 a.m. to 8 p.m., Eastern time


All investing is subject to risk, including the possible loss of the money you invest.

When taking IRA or employer plan withdrawals before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.