How do I start saving for retirement?

Start by contributing enough to your employer's 401(k) to capture any match, then open and fund an IRA. Automate contributions, increase them when your income grows, and let compound growth do the heavy lifting over time.

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.

IRS retirement savings facts

401(k) elective deferral limits and IRA contribution limits both adjust annually for inflation; the IRS publishes current amounts on its retirement plan limits page. — IRS — Retirement Topics: Contribution Limits
Workers age 50 and older are eligible for catch-up contributions to 401(k) plans and IRAs above the standard annual limits. — IRS — Retirement Topics: Catch-Up Contributions
SEP-IRA contribution limits for self-employed individuals are substantially higher than standard IRA limits; the IRS publishes the current limit annually. — IRS — SEP Plan FAQs

Key takeaways

Always capture your full employer 401(k) match before directing savings elsewhere — it's an immediate 50%–100% return.
Open an IRA (Roth or traditional) once you've hit the match; current limits and eligibility are on the IRS website.
Automate contributions so saving happens on payday before you can spend the money.
Increase your deferral percentage by 1% each year or with every raise — small increments compound significantly.
Self-employed savers should explore SEP-IRAs and Solo 401(k)s, which carry much higher contribution ceilings.
Consult a licensed financial advisor for personalized retirement planning — contribution strategy depends on your tax situation.