Retirement Basics
All of us will eventually retire, and now is the ideal moment to begin saving for that day. It is never too soon to start saving for retirement, and it is never too late. Here is another circumstance where the magic of compound growth will be in full effect, but this time with the added tax advantages. Below is the full list of retirement accounts and their given benefits and trade-offs.
Retirement Account Comparison
| Account | Type | Tax Treatment | Contribution Limit (2025) | Ideal For | Withdrawal Rules |
|---|---|---|---|---|---|
| Roth IRA | Individual | Pay taxes now, tax-free growth & withdrawal | $7,000 (under 50) | Young earners or those expecting higher income later | Contributions can be withdrawn anytime tax-free; earnings after age 59½ |
| Traditional IRA | Individual | Tax-deductible now, taxed at withdrawal | $7,000 (under 50) | People who expect to be in a lower tax bracket in retirement | Withdraw after 59½ to avoid 10% penalty + taxes |
| 401(k) | Employer-sponsored | Traditional: pre-tax; Roth: post-tax | $23,000 (under 50) | Employees with access to employer-sponsored plans, especially with match | Withdraw after 59½; early withdrawals taxed + 10% penalty |
| 403(b) | Employer-sponsored (nonprofit) | Same as 401(k) | $23,000 | Teachers, nonprofit, and government employees | Same rules as 401(k) |
| Thrift Savings Plan (TSP) | Federal employees | Traditional or Roth | $23,000 | Military & federal government workers | Withdraw after 59½; penalty if earlier |
Now you may be asking, what is employee match, and how does it work? Well, simply put, they will usually 1:1 match your investment up to a certain amount, so in essence, free money!
Now, for those of you who may be thinking that it’s too early to invest and that it’s better to kick the can down the road, it’s not.
Let’s look at a quick example of what laying the groundwork early will do for you. Let’s say you invest $5,000 every year from age 25 to 65 at ~6.5%. That’s going to turn into $878,160 by the time you retire!
Find the Right Retirement Account
Select your details below to see a ranked list of retirement accounts that may best fit your needs.