Saving more money for future goals, including retirement, is a popular New Year's resolution. But it's also easier said than done. Often, it involves making changes to your lifestyle and spending habits so you can free up additional cash for retirement savings. But that's only the first step.
You also have to decide where to keep your money so it can grow quickly and be accessible when you need it. The best retirement accounts for you will vary depending on your situation, but here are three of the best to consider.
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1. 401(k)
Your 401(k) is probably your best bet if you qualify for an employer match. Every company's matching formula is different, but it's possible to take home hundreds or even thousands of dollars more per year by claiming your full match. This could grow to tens of thousands of dollars or more after it's invested for a few decades.
401(k)s also stand out for their high contribution limits, which are ideal for workers hoping to save a large percentage of their income in 2025. Workers under age 50 may set aside up to $23,500 next year. Those aged 50 to 59 and 64 and older can contribute up to $31,000 and those aged 60 to 63 can contribute up to $34,750 in their 401(k) next year. Even if you only save half that much, it'll go a long way toward increasing your retirement readiness.
In recent years, we've seen 401(k)s become even more appealing with the introduction of Roth 401(k)s. They're essentially the same as traditional 401(k)s, but you fund them with after-tax dollars. This allows you to take tax-free withdrawals in retirement as long as you're at least 59 1/2 years old at the time and have had the account for at least five years.
2. IRA
If you don't have access to a 401(k) through your employer, an IRA is probably your best option. Contribution limits for these accounts are lower -- just $7,000 for adults under 50 in 2025 and $8,000 for adults 50 and older. But these accounts also give you greater flexibility than 401(k)s.
You have a broader range of investment options to choose from whereas most 401(k)s limit you to a handful of mutual funds. This can help you minimize your investment fees, which can help you grow your savings more quickly.
IRAs also give you a choice between traditional accounts, which you fund with pre-tax dollars, and Roth accounts, which you fund with after-tax dollars. Roth accounts have income limits, though. This can prevent some high earners from contributing directly to a Roth IRA.
3. Health savings account (HSA)
Health savings accounts (HSAs) are designed to hold money for medical expenses, though you can use them for retirement savings too. They're only available to those with high-deductible health insurance plans. These are plans that have a deductible of at least $1,650 for individuals or $3,300 for families in 2025.
If you qualify, you can open an HSA on your own with any bank or broker that offers them. It's best to choose a provider that will let you invest your HSA funds so your money can grow just like savings in your 401(k) or IRA. Otherwise, you'll probably only earn a small rate of return each year.
HSAs function like traditional IRAs with a bonus of tax-free medical expenses at any age. Your contributions reduce your taxable income this year, your earnings grow tax-deferred, and you pay ordinary income taxes on non-medical withdrawals after 65. Non-medical withdrawals under this age carry a 20% penalty.
You can set aside up to $4,300 in an HSA in 2025 if you have a qualifying individual plan or $8,550 with a qualifying family plan. Adults 55 and older can add an extra $1,000 to these limits.
You don't have to limit yourself to just one retirement account
If more than one of the above retirement accounts appeal to you, it's fine to spread your savings around between two or even all three of them. For example, you might contribute to a 401(k) first to get your company match. Then, switch to an IRA. If you max that out, you can save in an HSA until the end of the year. Consider the pros and cons of each and your personal savings strategy to decide on the right approach for you.
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