If you want to make 2026 the year you get serious about your retirement, here’s some tips on how to do it and why it matters.
1. Maximize Your Retirement Savings
A 401(k) and an IRA are two simple and effective ways to save for retirement. Whether it’s a Traditional IRA (pre-tax contributions, tax-deferred growth) or a Roth IRA (after-tax contributions, tax-free growth), having an IRA can help give you extra flexibility in retirement. If you find a provider that offers a 1% match, like PensionBee, that’s an immediate boost to your savings that has the potential to compound over time.
Traditional and Roth IRA Contribution Limits
If your employer offers a 401(k), start the year by reviewing your contribution rate. Even small increases can add up over time, thanks to the power of compound interest. If your company offers a 401(k) match, make sure you contribute enough to get the full benefit. Think of it as “extra money” you don’t want to leave on the table.
For those turning 50 or older, every year brings a big advantage: catch-up contributions. You can contribute extra to both your 401(k) and IRA on top of the standard limits, giving your retirement savings a boost if you’ve fallen behind or want to supercharge your nest egg.
To make planning easier, here’s a clear look at the 401(k) and IRA contribution limits for 2025 and 2026:
401(k) Contribution Limits
2. Consider Rolling Over Old 401(k)s
One of the best habits you can develop for retirement is consolidating old accounts. If you’ve changed jobs, you may have old 401(k)s sitting around. Rolling these accounts into an IRA (Traditional or Roth) can help simplify management, possibly reduce fees, and can give you more control over your investments.
3. Choose Between Traditional and Roth IRAs
If you’re opening an IRA or rolling over a 401(k), you’ll need to decide between a Traditional IRA and a Roth IRA. Here’s a quick breakdown:
- Traditional IRA: Contributions are made with pre-tax dollars, reducing your taxable income now. Savings grow tax-deferred, and withdrawals are taxed as ordinary income after age 59½. Ideal for individuals who expect to be in a lower tax bracket in retirement.
- Roth IRA: Contributions are made with after-tax dollars, meaning you’ve already paid taxes on the money you put in. Savings grow tax-free, and qualified withdrawals aren’t taxed. Ideal for individuals who expect to be in a higher tax bracket in retirement or who want tax-free income later.
You can contribute to both a Traditional and a Roth IRA in the same year, as long as your combined contributions stay within the annual limit. Using both accounts together can give you flexibility and the ability to benefit from both tax strategies.
