How do I start saving for retirement?

Retirement savings doesn't require a large income or a complex strategy at the start — it requires starting early and being consistent. The IRS governs the two main individual vehicles — 401(k) plans and IRAs — under separate rules; the IRS retirement plans overview is the authoritative starting point for understanding contribution limits and tax treatment.

Step 1: Capture your employer match first

If your employer offers a 401(k) match, contribute at least enough to get the full match before directing money anywhere else. A match is an immediate 50%–100% return on that portion of your contribution — no investment can reliably beat it. The IRS explains 401(k) elective deferrals and the annual contribution limits, which adjust for inflation each year.

Step 2: Decide between a Roth IRA and traditional IRA

After capturing any employer match, consider opening an IRA. A Roth IRA uses after-tax dollars but grows tax-free — generally advantageous if you expect to be in a higher tax bracket in retirement. A traditional IRA may offer a deduction today but taxes withdrawals later. The IRS Traditional and Roth IRA comparison covers who qualifies for each and the current contribution limits. Consult a licensed financial advisor to determine which is right for your situation.

Step 3: Automate contributions

Automation removes the decision from every paycheck. Set your 401(k) deferral percentage through your plan administrator and set up a recurring bank transfer to fund your IRA monthly (the IRS sets an annual IRA contribution limit — spreading contributions monthly keeps you on pace). Once automated, increase your deferral by 1% each year or whenever you get a raise. Small increases compounded over decades produce large balances.

Order of operations: where to put each dollar

• 1. 401(k) — up to the employer match (free money first).
• 2. IRA (Roth or traditional) — up to the annual limit.
• 3. 401(k) — increase contributions toward the annual IRS limit if you have more to save.
• 4. HSA (if enrolled in a qualifying high-deductible health plan) — triple tax-advantaged, strong for future healthcare costs.
• 5. Taxable brokerage account — after maxing tax-advantaged accounts.

Self-employed? You have more options

If you're self-employed or a small business owner, a SEP-IRA or Solo 401(k) allows much higher annual contributions than a standard IRA. These accounts can dramatically accelerate retirement savings if your income is variable or growing. The IRS publishes limits for each on its self-employed retirement plans page.