retirement
18 questions
- Finance
How do I invest for retirement in my 20s?
In your 20s, your most valuable asset is time — a dollar invested at 22 is worth roughly four times more at retirement than a dollar invested at 42. The playbook is straightforward: capture your 401k employer match, open a Roth IRA, buy low-cost index funds, and invest consistently.
- Finance
How does a 401k work?
A 401k lets you contribute pre-tax income to a retirement account through your employer — money grows tax-free until withdrawal after 59½. Always contribute at least enough to capture the full employer match.
- Finance
Can I use an HSA as a retirement account?
Yes. An HSA's triple tax advantage — pre-tax contributions, tax-free growth, tax-free medical withdrawals — makes it more tax-efficient than a traditional IRA or Roth IRA for healthcare expenses. After 65, you can withdraw for any purpose and pay only income tax, making it function like a traditional IRA for non-medical spending.
- Finance
What are catch-up contributions?
Catch-up contributions let people aged 50 and older contribute extra money to retirement accounts beyond the standard annual limits. For 2025, the catch-up for 401(k) and 403(b) plans is $7,500, with a special higher catch-up of $11,250 for ages 60–63 introduced by the SECURE 2.0 Act.
- Finance
What happens to my 401k if I quit my job?
Your 401k money is yours when you quit — you do not lose it. You have four options: roll it to your new employer's plan, roll it to an IRA, leave it in the old plan, or cash it out. Cashing out triggers income taxes plus a 10% early withdrawal penalty and is almost always the wrong move.
- Finance
What is a 403(b) plan?
A 403(b) is a tax-advantaged retirement plan for employees of public schools, nonprofits, and certain other tax-exempt organizations. It works nearly identically to a 401(k): contributions reduce taxable income, grow tax-deferred, and are taxed as income when withdrawn in retirement.
- Finance
What is a backdoor Roth IRA and how does it work?
A backdoor Roth IRA is a two-step strategy for high earners who exceed Roth IRA income limits: contribute to a traditional IRA with after-tax money, then convert it to a Roth IRA. The pro-rata rule creates a tax complication if you have other traditional IRA balances.
- Finance
What is a good savings rate?
For retirement, Fidelity recommends saving at least 15% of gross income, including any employer match. The US personal savings rate (BEA) averaged around 3.6% in late 2025 — far below what most financial planners recommend. The gap between the two numbers explains why many Americans reach retirement underfunded.
- Finance
What is a required minimum distribution (RMD)?
A required minimum distribution (RMD) is a mandatory annual withdrawal the IRS requires you to take from traditional IRAs, SEP IRAs, and most 401k accounts starting at age 73. The amount is calculated each year based on your account balance and IRS life expectancy tables — failing to take your RMD triggers a 25% penalty on the amount you should have withdrawn.
- Finance
What is a Roth 401(k) and should I use one?
A Roth 401(k) is a workplace retirement account where contributions are made after tax, so withdrawals in retirement are tax-free. Unlike a Roth IRA, there are no income limits — anyone whose employer offers one can contribute regardless of earnings.
- Finance
What is a SEP IRA?
A SEP IRA (Simplified Employee Pension) is a retirement account for self-employed people and small business owners that allows contributions up to $72,000 in 2026 — far more than a regular IRA. It works like a traditional IRA: contributions are tax-deductible and withdrawals in retirement are taxed as ordinary income.
- Finance
What is a solo 401(k)?
A solo 401(k) — also called an individual 401(k) or one-participant 401(k) — is a retirement plan for self-employed people with no full-time employees (other than a spouse). It allows much higher contributions than a SEP-IRA at the same income level, because you can contribute as both the employee and employer.
- Finance
What is a target-date fund?
A target-date fund is a single fund that automatically shifts from aggressive (mostly stocks) to conservative (more bonds) as you approach a chosen retirement year. Pick the fund with the year closest to when you plan to retire and it handles the rest.
- Finance
What is a Roth IRA vs a traditional IRA?
A Roth IRA uses after-tax dollars and grows tax-free — you pay no tax on withdrawals in retirement. A traditional IRA gives you a tax deduction now and you pay taxes on withdrawal. Choose Roth if you expect to be in a higher tax bracket in retirement; choose traditional if you want the deduction today.
- Finance
What is Social Security and how does it work?
Social Security is a federal program that pays monthly retirement income to workers who have accumulated at least 40 credits (roughly 10 years of work). Your benefit amount is based on your highest 35 years of earnings — you can claim as early as 62 (reduced benefit) or as late as 70 (maximum benefit). The longer you wait, the larger your monthly check.
- Finance
What is the new $6,000 senior deduction for 2026?
The One Big Beautiful Bill Act created a new federal deduction of $6,000 per eligible filer ($12,000 for couples where both spouses are 65 or older) for tax years 2025 through 2028. It is available whether you itemize or take the standard deduction, but phases out for modified adjusted gross income above $75,000 (single) or $150,000 (married filing jointly). It is in addition to — not a replacement for — the existing extra standard deduction for filers over 65.
- Finance
When can I withdraw from my IRA without penalty?
You can withdraw from any IRA without the 10% early withdrawal penalty at age 59½. For a Roth IRA, earnings also need to have been in the account for at least 5 years (the '5-year rule') to be tax-free. Roth IRA contributions — but not earnings — can be withdrawn at any age with no tax or penalty.
- Finance
When should I claim Social Security?
Claiming at 62 reduces your benefit by up to 30% permanently. Waiting until 70 increases it by 24% above your full retirement age benefit. The decision hinges on health, life expectancy, other income sources, and spousal strategy — not a single right answer.