The 3 Best Ways to Save for Retirement, #163

Retire With Ryan

When people find out that I am a financial advisor, they usually ask me about retirement. Specifically, they want to know the best ways to save in order to secure their financial future. So in this episode, I’m giving you my three favorite ways to save for retirement and the pros and cons of each strategy.

You will want to hear this episode if you are interested in...

• The pros and cons of a 401k [1:33]
• The pros and cons of a Roth IRA [8:03]
• The pros and cons of a Health Savings Account [11:32]

Getting the full 401k picture

One of the biggest pieces of the retirement puzzle is saving. You have to be able to save enough money during your career to sustain you through retirement when you stop working. How you go about it is up to you, but the first place I would start is a traditional 401k. The biggest pro to a 401k is that many employers will match your contributions at 3% or more. You also have the added benefit of payroll deduction, so it’s easy to “set and forget” your way to retirement success.

However, it’s not all sunshine with 401ks. There are some cons you should be aware of. The first is the standard annual contribution limit of $22,500. Also, you are subject to a withdrawal fee if you try to take out money before you turn 59 and a half. Some 401ks can have high fees, and you could be limited on your investment options depending on who your employer goes through. Finally, 401ks have Required Minimum Distributions, which force you to take out a certain amount of money after the age of 73.

Additional retirement saving strategies

My second favorite retirement saving method is using a Roth IRA. This is a great way to invest after-tax money where it can grow tax-deferred. You can also withdraw the money tax-free because it was already taxed when it went in. Depending on the company you work for, Roth IRAs tend to have a large selection of investment options, and there are no Required Minimum Distributions like with a 401k.

Health Savings Accounts (HSAs) are my third and final retirement savings strategy, and it’s one regular listeners of the podcast should be familiar with. I talk a lot about HSAs because they are the only triple tax-free account out there. You receive a deduction when you put the money in, the money grows tax-deferred. When you take the money out for health-related costs, it's also tax-free! It’s a win all the way around. Listen to this episode for more retirement saving strategy pros and cons!

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