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Saving for retirement: Tips, tools, and how to make the most of them


By The Human Interest Team

Editorial Policy

While nearly half of people have $0 in retirement savings, we have good news. You have access to a Human Interest 401(k) - a key tool to help you build your financial security for retirement. 

Getting started with retirement savings can be tough, but here’s how we’ll make it easier: In this guide, we’ll cover what you need to know about different retirement savings tools: a 401(k), an IRA, and more. We’ll also share retirement savings tips that can help you based on your age, your relationship status, whether you are just starting or already have some savings, and more. 

There are a lot of ways to save for retirement. Though the most important thing to do is to make sure you are saving,  it can feel overwhelming to figure out where to begin. Let’s walk through some of the most common retirement savings tools one at a time and share what you need to know about each of them.

Saving wisely: common retirement savings tools

1. A 401(k) 

The most common tool to save for retirement is a 401(k), a retirement savings plan that comes with tax advantages and is operated through your employer. We’ll give the basics here, but if you want to read in-depth about how a 401(k) works, you can refer to this guide. One advantage of a 401(k) is it has the highest annual contribution limit of any formal retirement savings plan. 

What you need to know about a 401(k) 

How to accessThrough your employer
How to use itAs an employee at a company that offers a 401(k), you’ll be able to allocate a portion of your paycheck to your 401(k) account. Your employer may add an "employer match" on top of the funds that you put in.
After you part ways with that company, you probably* will be able to keep your 401(k) open but you won’t be able to add additional funds to it.
Types of 401(k)sTraditional, Roth
Tax advantagesTraditional: Postpone taxes until retirement
Roth: Pay taxes upfront so you’ll take money out tax-free in retirement
Annual contribution limit$20,500 ($27,000 if you’re age 50+) - not including employer match
Associated fees Vary by plan provider, the types of investments, and whether or not the provider charges any 401(k) transaction fees for specific services, such as taking out a loan, etc. Note: We charge zero 401(k) transaction fees.
What else to knowEmployer matching contributions do not count toward the annual contribution limit.
You can have more than one 401(k) account, even at the same time, but you cannot contribute more than $19,500 ($26,000 if age 50+) per year.

*Unless your balance is very low, in which case an employer may require you to move your funds elsewhere (and give you instructions about how to do so). 

2. An IRA

Rather than being offered through an employer, an IRA or “Individual Retirement Account” is one that any person can open (you don’t need an employer to start it for you unless it’s a SEP IRA). Speaking of a SEP IRA, that’s just one of several types of IRAs you might run into. Each type of IRA comes with different restrictions and allowances, so it’ll take some homework to figure out which one works for you, if you want to use one. 

A quick summary: IRAs come with tax advantages, but you cannot contribute as much per year as you can with a 401(k) (again, except with a SEP IRA, and only employers can contribute money into a SEP IRA; employees can’t). 

How to access An individual can open an IRA through a bank, brokerage, investment firm, etc.
How to use it You can put money from any source into an IRA. It’s not connected with your payroll. You can put funds in anytime up to the annual contribution limit.
Types of IRAs Traditional, Roth, SEP, SIMPLE
Tax advantages Traditional: Postpone taxes until retirement
Roth: Pay taxes upfront so you’ll take money out tax-free in retirement
SEP: Works like a traditional IRA, i.e., postpone taxes until retirement
SIMPLE: Works like a traditional IRA, i.e., postpone taxes until retirement
Annual contribution limit*Traditional, Roth: $6,500 ($7,500 if you’re age 50+)
SEP: Contributions cannot exceed the lesser of 25% of the employee’s compensation for the year or up to $66,000 for 2023 ($61,000 for 2022).
SIMPLE: $15,500 ($19,000 if you’re age 50+)
Associated fees Varies by the type of IRA, where the account is held, and possibly by the value of assets in the account. They typically come with an annual or quarterly maintenance fee.
What else to know-SEP and SIMPLE IRAs require specific employment arrangements to be eligible.
-Only employers make contributions to SEP IRAs (not employees).
-Both a SEP and SIMPLE operate like a traditional IRA in terms of when taxes are paid. They also require an employer to play a role.

Types of IRAs

  • Traditional IRA - taxes later - An individual retirement account where a person can set aside pre-tax money. 

  • Roth IRA - taxes now - An individual retirement account where a person can set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free. If you have a certain income, you may be restricted in how much you can contribute to a Roth IRA. 

  • SEP IRA - aka Simplified Employee Pension IRA - A SEP IRA works like a traditional IRA, including the contributions, deferred taxes, etc. Only employers can contribute to a SEP IRA. 

  • SIMPLE IRA - aka Savings Incentive Match Plan for Employees - A SIMPLE IRA is available to employers with 100 or fewer employees as well as for self-employed individuals.

3. A brokerage account 

A brokerage account is a type of investment account through which you can own investment products like stocks, bonds, mutual funds, and more. While many people use a brokerage account to save for retirement, it isn’t designed specifically for long-term investing. Instead, you can invest for any reason. A brokerage account has even fewer restrictions than an IRA, including that just about anyone can open this type of account, but it doesn’t come with built-in tax advantages like a 401(k) or IRA.

What you need to know about a brokerage account

How to access An individual can open a brokerage account; some have a minimum investment required
How to use it Most are relatively easy to open, but using them may require more effort.
Many are tailored for savvy investors to direct themselves, including choosing their own investments and assembling them into a portfolio. Be sure to find one aligned with your assets (some require a minimum level of assets), your level of investing experience, and the level of control you want to have (e.g. do it for me vs. let me do it myself).
Types of brokerage accountsN/A
Tax advantagesN/A - you’ll have to pay capital gains taxes on any growth.
Annual contribution limitNone
Associated fees Varied. There may be fees associated with specific investments you choose, as well as for conducting trades. A quarterly or annual account maintenance fee is also typical.
What else to knowThe features available in brokerage accounts vary, including the investments you have access to, the assets you need to invest, fees, and the interface.
You’ll pay capital gains taxes on any growth (each year as you file income taxes).

Other retirement savings tools and options

While the above three items are some of the most common tools that people use to save for retirement, that’s not everything that people use. You may have heard of people planning to use other items to build their financial future. We’ll cover those briefly and then review some pros and cons. 

  • Real estate: Whether you purchase a property to generate a steady stream of rental income or choose real estate-focused investments, such as Real Estate Investment Trusts (aka REITs), many people are interested in learning more about how real estate could play a role in saving for retirement. Purchasing an investment property is a significant cost, so it may not be an option for everyone. REITs are more accessible and can often be accessed through a 401(k), IRA, or brokerage account, as well as through specialty investing companies. Human Interest includes a real estate investment trust (Vanguard REIT Index Admiral) in our Model Portfolios to provide participants exposure and access.

  • Checking/savings accounts: While these accounts are easy to start and easy to maintain, and often come with minimal fees, they’re not designed to help your money grow. With the low interest rates we’ve seen in the last decade, your nest egg may even lose value because it could fail to keep pace with inflation. 

  • Family inheritance: There’s a lot of talk about the windfall that will be passed to Gen X and Millennials as Boomers pass on their wealth to the next generation. However, there are a lot of pieces to navigate: the timing may be unknown, the amount may vary widely based on your older loved one’s health as well as how long they live, and the taxes can be difficult to navigate. Together, this makes relying on a family inheritance a less reliable strategy for funding retirement. 

  • Selling a business: Many business owners are planning to sell their businesses in order to generate the money they need for retirement. Determining when to sell can be challenging and, in some markets, finding a buyer may be another challenge. 

  • Employment income (aka working during retirement): It’s worth mentioning one more rising trend that people are increasingly interested in using to fund their retirement — and that’s not retiring, at least not in the traditional sense. Whereas retirement used to mean the complete and total withdrawal from the workforce, people today are becoming more interested in including some work, often more flexible or enjoyable work, in their retirement plans. That might even help them delay when they need to start drawing down their retirement savings. 

In all likelihood, you’ll use a mix of the retirement savings tools out there to build up your funds for retirement.

Here are some pros and cons of various retirement savings tools:

Retirement savings tips 

1. Start now

One of the biggest money mistakes that people make in their 20s or 30s is failing to harness the power of compound interest, one of the most powerful tools in your retirement savings arsenal and the easiest to leverage. All you have to do is start. The sooner the better.

What is compound interest?

When you make a deposit into any type of investment account, that sum can grow. The average return of the stock market in the last 20 years is 8%.

If you were to deposit $1,000 a year (that’s roughly $39 per pay period), here’s what that could look like if you retire at age 65:

If you start saving at age...*2030405060
Balance at 65$318,946$151,988 $68,911 $27,572 $7,002

*Assumes 7% annual return

Want to try? Here’s a retirement calculator you can use to model different scenarios. 

2. Contribute enough to max out your employer match

If your employer offers an employer match - a portion of money they put into your 401(k) -  then try to make sure you do the math to contribute what you need in order to get the max match and not leave anything on the table. You’ll have to look up the matching formula, which can be found in the Documents section when you log into 

*Note: The employer match does not count against the annual contribution limit that you can put in as an individual. The annual contribution limit is $20,500 for 2022. Any amount your employer contributes does NOT count towards the $20,500. 

3. Use a Roth 401(k)

Roth accounts are often advised for younger savers because they’re likely to be in a lower tax bracket now then they will be in at some point in the future. That way, you can pay a lower tax rate now and then, at retirement, you can take out everything from your Roth 401(k) tax-free. 

Note: If your employer offers a match, they’ll be treated as Traditional contributions (i.e., be taxed upon withdrawal at retirement).  

4. Consider contributing to both a Traditional and Roth 401(k)

If you’re not sure which will work best for you, you can hedge your bets by contributing to both a traditional (pre-tax) and a Roth (post-tax) 401(k). All Human Interest plans offer both. You can even contribute to both simultaneously, though between the two you cannot exceed the $20,500 annual contribution limit (it’s not $20,500 for Roth and $20,500 for Traditional).

Retirement savings tips for those over 50 years old

1. Use catch-up contributions

Congratulations! You are able to accelerate your retirement savings in the decade or two leading up to retirement. The IRS has created a path allowing people aged 50 and older to use a higher contribution limit than everyone else. 

How catch-up contributions help savers age 50+ to accelerate building up their nest egg:

Age <50 Age 50+How much more you can put away for retirement over 10 years
401(k) $20,500 $27,000$65,000
IRA $6,000 $7,000 $10,000

*Assumes the annual contribution limit does not increase during that 10-year period.

2. Consider a Roth, or both Traditional and Roth

By doing so, you hedge against the possibility that you’ll put all your money in one plan that turns out to be the second-best choice. can’t afford to lose the current tax savings that a traditional 401(k) offers. Note: If your employer offers a match, they’ll be treated as Traditional contributions (i.e., be taxed upon withdrawal at retirement).  

3. Start with the most tax-advantaged tools first

You may need to review the suite that your employer offers, but here’s a quick overview of the tax advantages that come with different retirement savings tools:  

  • HSA: Health Savings Accounts are the most tax-advantaged type of account you can save in: 1) Your contributions are pre-tax, 2) You can invest the funds, which means any growth is tax-free, and, 3) You can take the funds out at retirement tax-free, so long as you spend that money on eligible health expenses. If you’re age 55+, you are able to contribute an extra $1,000 here over the annual $3,600 individual limit ($7,200 family limit), too. To be eligible, you must also be enrolled in a High Deductible Health Plan. Read more here.

  • 401(k):  Whether it’s a Traditional 401(k) or a Roth 401(k), they both come with tax advantages. (Note: a 403(b) and or 457(b) have similar tax advantages.) 

    • Traditional: Contributions are set aside before federal and state income taxes are withheld. Because this will lower your take-home pay, i.e., your taxable income, you’ll pay less in income tax today. You’ll defer taxes until retirement, when you may be in a lower tax bracket. 

    • Roth: With a Roth, you pay taxes now, but your investments - and any earnings - grow tax-free. That means you can take them out in retirement without any additional taxes (provided you hold your account for at least 5 years and are at least age 59 ½). 

  • IRA: You can also look to an IRA (traditional, Roth, or both) to supplement your retirement savings. Contributions may be deductible on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement.

Note: There are other tax-advantaged accounts available, though the ones listed above are the primary ones to save for retirement (versus a 529 or ESA, for example, which are tax-advantaged accounts to help you save for an education). 

Retirement savings tips for those with low savings

1. Start saving as much as you can

The sooner you get started, the sooner you can start taking advantage of compounding interest, i.e.., the returns on investments in your account will be reinvested and generate returns of their own. The sooner you begin saving for retirement, the longer the power of compounding can help you to grow your savings. Let’s compare two examples: 

  • Briana saves $50 per paycheck for 20 years: Growing at 7% per year on average, they’ll have invested $24,100. With returns, that total could be more than $52,000. 

  • Chris saves $50 per paycheck for 30 years:  Growing at 7% per year on average, he’ll have invested $36,100. With returns, that total could be worth nearly $123,000. 

2. Move beyond checking/savings

Not all retirement savings tools are created equal. Some definitely give more advantages than others. Anything that offers the ability to invest opens the opportunity to grow when the market grows, which could be at a pace faster than inflation. Far too many people are relying on checking/savings accounts as a primary tool to help them save for retirement. The low interest rates in recent years actually mean that the value of your money won’t keep pace with inflation (i.e., could lose value over time).

3. Keep your money working

What really matters though is that you set a long-term investment strategy (we can help with that through using any of our model portfolios offered through our built-in digital investment education) and then put your retirement savings on auto-pilot. It can be tempting to pull money out of the market, especially when you see swings up and down. History shows that the best thing to do has been to leave it in place. 

4. Automate your savings

One of the best features of a 401(k) is that it can help you make it easy to keep putting money away to build up your retirement savings. Each paycheck is an opportunity to add a little bit more. 

Good news: It’s easy to start your Human Interest 401(k). In roughly 5 minutes, you can be on your way to securing your financial future. You can find out more details about your company’s 401(k) plan in the Documents tab at

Tips to help you accelerate your savings 

1. Make sure you’re maxing out your employer match

Does your employer offer a match? If so, are you contributing what you need in order to max out your match? Do the math to figure out what you need to contribute in order to get the max available match. You don’t want to leave any money on the table! To do the math, look up details about the matching formula in the Documents section when you log into

2. Do a plus 1 (or 2)

Try to increase your contributions by 1% of your annual pay in the next month. If you get a bump in your pay, increase your contribution by another 1-2% on top of that. Here’s what a small increase could look like:

Annual pay Contribution rate Contribution (per pay period)* Balance at retirement (contributions + Interest*)
Scenario 1 $50,000 4% $84 $203,735.26
Scenario 2$50,000 5%$104 $254,156.56
Scenario 3$50,000 6%$125 $304,992.75
Scenario 4$50,000 7%$146 $356,231.53

*Rounded; Assuming 7% return annually, on average, compounding monthly that’s invested for 30 years, and two pay periods per month.

3. Consider opening an IRA

If you’re feeling behind and you’re able to max out your 401(k), you can look into an IRA where you can squirrel away another $6,000 (pre-tax or post-tax, if you qualify) per year. The deadline to contribute to an IRA is the same deadline for filing your tax return, e.g. April 15, 2022, for the year 2020. The tax benefits (i.e., the deduction you could tax on your tax return) may be limited if you (and your spouse, if you’re married) have access to a retirement plan through work.

If you’re in a couple

Planning one retirement is hard enough. Planning for two introduces new complexity: Will you retire at the same time or stagger? Are you optimizing your collective Social Security benefits? What if one of you needs caregiving? This is a topic worthy of a guide itself, but here are a few short considerations to help get you started: 

1. Be sure to save for two

You might think: If we both have a 401(k), do we both need to contribute to one? Likely, yes. Default contribution rates, employer matches, etc., are tied to an individual’s earnings rather than a couples. Also, it’s often the case that the role of saving falls to one person in a couple. In that case, they should double down on saving. Why? Dual-earner couples are undersaving and some experts worry that “two-earner couples are in the worst shape for retirement” -- even though they may have two incomes. Dual-income couples with one person contributing to a 401(k) are saving just 5% of their household earnings. Couples with two savers are contributing 9.3%.  

2. Get strategic with Social Security

Couples need to think strategically about when to begin collecting Social Security. You can start as early as age 62, but doing so may lock you in at a lower benefit for life by up to 30 percent. It might make sense for the older spouse to delay taking Social Security for a few years, because each year you postpone past Full Retirement Age (up to age 70), the monthly benefit will be 8 percent for the rest of your life.

3. Have a conversation about caregiving, just in case.

The top reason that people leave the workforce before their intended retirement age is for health reasons -- not necessarily their own. Instead, they, especially women, are prone to find themselves retiring earlier than planned. The impact wouldn’t just affect a household’s income today but can trickle down into the future, through reduced contributions to retirement plans and Social Security.

If you’re divorced

1. Watch out for the QDRO.

Typically, any contributions that were put into a 401(k) during the course of the marriage are considered joint property that should be split during a divorce (unless a prenuptial agreement was in place). A Qualified Domestic Relations Order, or QDRO, is required to split apart 401(k)s and similar retirement plans, though is not required for IRAs. What you need to know is they can be expensive, running around $500 (or more) -- except if you have a Human Interest plan. A QDRO is just one of more than twenty 401(k) transaction fees we eliminated in 2020. 

2. Know what it means for Social Security

If you are divorced, your ex-spouse can receive benefits based on your record, and that’s true even if you have remarried). The main requirement is that your marriage lasted at least 10 years and that your ex-spouse is still unmarried.  Read more on the Social Security Administration website.

If you’re single

Roughly half of American adults are married today versus 72% in the 1960s and one-quarter of people aged 25-34 projected to never marry, retirement planning for singles will become more important. Most retirement advice applies, but special considerations for singles include contingency planning for living alone as well as special strategies when it comes to planning for your health, care, and estate. It’s about building out a robust safety net.

1. Build your retirement team

If you’re single, you may have friends or loved ones to tap into to help support you in retirement, but you may also need to consult some of the following types of professionals to your roster to help planning: 1) geriatric care managers can help with Medicare paperwork, medications, and connections to the care ecosystem, including in-home care, home health aides, and facility-based care, 2) Elder law attorneys can help you look after your estate and documentation for what you want to have happen to everything in your legacy, 3) a CPA can help with tax planning, and 4) a Professional Fiduciary can help with legal, financial, and health care decisions.

2. Consider contingencies

To help ensure you won’t need to tap into the retirement savings you already have, make sure that you have emergency savings built up as well as disability insurance coverage, just in case you find yourself needing to take time away from work.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.

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