You've made a New Year's resolution to increase your retirement savings, and you may have even worked out a budget that will allow you to make regular monthly contributions. That's a great start, but there's another important decision you still need to make.
You have to decide where to invest your money so it can do the most good. This might seem easy, especially if you don't have access to a 401(k) through your job. However, you likely still have multiple options, each with its own advantages and disadvantages. Here are some of the most common.
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401(k)s
A 401(k) might seem like the default option if you have one available to you, and it can be a good choice, especially if you qualify for an employer match. This is free money you'll only get if you put funds in your 401(k), so it definitely makes sense to save here until you've claimed the entire thing.
If your employer doesn't offer a 401(k) match or you've already claimed your full match, it might still make sense to continue saving here. These accounts have high contribution limits -- $24,500 for those under 50 in 2026, $32,000 for those 50 to 59 and 64 or older, and $35,750 for those aged 60 to 63. The other retirement accounts listed here can't match this.
Additionally, many employers now offer their employees a choice between traditional and Roth 401(k)s. This gives you greater control over your tax bill today and in retirement. Roth 401(k)s don't have the income limits that Roth IRAs have, so they're valuable for high earners who want to build up their Roth savings so they can take more tax-free retirement withdrawals. Just remember that the contribution limits above apply to all your 401(k) plans, not each individually.
You may want to skip saving in your 401(k) after you've received your match if you dislike your employer's investment options or believe the plan charges excessive investment fees. In that case, one of the options listed below may be more suitable for you.
IRAs
IRAs are often a fallback for individuals who lack access to a 401(k) or are dissatisfied with their plan. Anyone can open and contribute to an IRA as long as they or their spouse has earned an amount equal to or greater than the total contributions to the account. For example, if you save $5,000 in an IRA, you or your spouse must have at least $5,000 in earned income that year.
IRAs also come in traditional and Roth flavors. As with 401(k)s, these differ in tax treatment. You fund traditional IRAs with pre-tax dollars, which gives you an up-front tax break, but you must pay taxes on retirement withdrawals. Roth accounts allow tax-free withdrawals in retirement because you pay taxes on your contributions when you make them. You can also save in both types of accounts, provided you don't exceed the Roth IRA's income limits.
The biggest drawback to IRAs is their comparatively low contribution limits compared to 401(k)s. You can only set aside up to $7,500 here in 2026 if you're under 50 or $8,600 if you're 50 or older. However, this will be plenty for most people.
IRAs also give you much greater investment options than 401(k)s. This gives you more control over how much you pay in fees. You can invest in just about anything with an IRA, while a 401(k) usually limits you to a selection of funds your employer has chosen.
Health savings accounts (HSAs)
Health savings accounts (HSAs) are supposed to help you cover medical expenses, but they're also great retirement accounts. You get a tax break on your contributions up front, your earnings grow tax-deferred, and medical withdrawals at any age are tax-free. You can also make non-medical withdrawals, although these are taxable and carry a 20% penalty if you are under age 65.
HSAs are only available to those with high-deductible health insurance plans. These are either individual plans with a deductible of $1,700 or more or family plans with a deductible of $3,400 or more. You also cannot have another insurance policy, such as Medicare, that doesn't meet this criterion.
If you're eligible to save in an HSA, you can open one through many banks and brokers. Choose an account that enables you to invest your savings so they will grow more quickly. You can set aside up to $4,400 in 2026 if you have a qualifying individual plan or $8,750 if you have a qualifying family plan. Those aged 55 and older can save an additional $1,000 above these limits.
It's also fine to save in more than one of the above accounts if that suits you. You might start with your 401(k) until you've gotten your full match. Then, switch to a Roth IRA, and if you max that out, put some money in your HSA. Which accounts you use is up to you. Just ensure you understand the pros and cons of each option and avoid exceeding the annual contribution limits.
