The more you're able to save for retirement, the more confident you can feel as your career starts to wind down. And it's especially important to build up a decent retirement nest egg given that Social Security's future is somewhat uncertain.
While Social Security is certainly not going away, benefit cuts are a possibility due to the program's anticipated financial shortfall. So the more money you're able to save, the easier it's apt to be to cope with benefit cuts should they become reality.
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If you have access to a 401(k) plan through your job, there's perhaps no easier way to save for retirement. With a 401(k), your employer deducts your contributions from your pay on a regular basis, helping you to stay on track. Plus, many companies offer a 401(k) match that equates to free money for retirement.
Meanwhile, data from Fidelity shows that a growing number of Americans are making a very smart decision with regard to their 401(k)s. And you may want to do the same.
Have you considered a Roth 401(k)?
Employer-sponsored 401(k) plans come in two varieties -- traditional and Roth. Many people like to save for retirement in a traditional 401(k) because contributions are made on a pre-tax basis, leading to immediate tax savings. But Roth 401(k)s offer a world of benefits.
While contributions go in on an after-tax basis, investments in a Roth 401(k) get to grow tax-tax. And Roth 401(k) withdrawals are tax-free, thereby sparing you an IRS bill at a time when you may be more cautious about money.
Plus, Roth 401(k)s do not force savers to take required minimum distributions (RMDs). RMDs aren't always a problem, since many retirees end up tapping their savings regularly to cover expenses. But RMDs can be a huge problem for people who don't want to withdraw that money right away. With a Roth 401(k), they're not something to worry about.
Fidelity reports that as of the third quarter of 2025, 17.5% of 401(k) plan participants were saving in a Roth account. That's up from 15.9% a year prior.
Fidelity also says that 19% of millennials and 20% of Gen Zers are saving for retirement in a Roth 401(k). That's smart, because younger workers who save in a Roth have many years for their money to grow completely tax-free.
For these reasons, you may want to consider a Roth 401(k) yourself if your workplace plan comes with that option. The good news is that many companies with a 401(k) have a Roth version, allowing you to enjoy the aforementioned benefits.
You can also get the best of both worlds
You may not want to stop saving for retirement in a traditional 401(k) due to the immediate tax break involved. But you should know that many workplace plans allow you to save in a traditional and Roth 401(k) at the same time.
If your company offers this option, it may be worth considering. That way, you get to shield some of your income from taxes in the near term. At the same time, you'll be able to grow some of your savings tax-free, enjoy tax-free withdrawals in retirement, and avoid RMDs on some of your savings if you end up in a situation where you don't want to access that money just yet.
A Roth 401(k) can be especially beneficial if you're on the younger side and have many years to grow your money tax-free. It can also be a good choice if you're earning an entry-level wage now and therefore aren't in a particularly large tax bracket. So it pays to consider a Roth -- if not for your savings entirely, then perhaps for a portion.
