If you're currently setting money aside in any retirement account, you're off to a great start. Regular contributions are one of the most important habits that lead to a comfortable retirement. But they're not the only thing that's important.
Where you put your money also has a huge effect on how much you ultimately end up with. It's also why I choose a very specific account to start saving in every year.
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I'm focused on tax-free retirement withdrawals
I always start saving in my Roth IRA each year because I want to have at least some funds I can withdraw tax-free in retirement, so I have greater control over my future tax bills. Roth IRAs are unique in that you pay a tax on your contributions in the year you make them, but after that, your savings grow tax-free.
You can withdraw your contributions tax- and penalty-free at any age, which makes the Roth IRA a valuable asset for those thinking about retiring early. And you can withdraw earnings without any tax consequences once you're at least 59 1/2 and have had a Roth account for at least five years.
Contribution limits change over time, and in 2026, you're allowed to contribute up to $7,500 to a Roth IRA if you're under 50. Those who will be 50 or older by the end of the year may save up to $8,600 in one of these accounts. Keep in mind these limits apply to all your IRA contributions, including traditional IRA contributions, not to each account individually.
A Roth IRA isn't a good fit for everyone
Roth IRAs may not be an option for you if you have a high income. These accounts have income limits that prohibit high earners from saving directly in one. However, you could do a backdoor Roth IRA instead. This is where you put money into a traditional IRA and then convert it to a Roth IRA. It accomplishes the same thing with a few extra steps.
If you have access to a Roth 401(k) through your job, you may prefer to use this instead. The government taxes these accounts the same way as it does Roth IRAs. But there are no income limits, and the contribution limits are much higher.
In 2026, adults under 50 can save up to $24,500, while those aged 50 to 59 and 64 or older can save up to $32,500. Those aged 60 to 63 by the end of the year can save the most at $35,750. Again, these limits apply to your total 401(k) contributions, but not to the matches your employer makes on your behalf.
It's also possible that you don't want to use a Roth account at all. If your income is high today, you may prefer to keep some of your savings in traditional IRAs or 401(k)s. These give you a tax break on your contributions this year and allow you to delay taxes until retirement, when you may be in a lower tax bracket than you are now.
