10 Best Retirement Accounts to Retire Rich

Retirement accounts are complicated and hard to understand. In this post, I break down the 10 best retirement accounts and all the details on all of them. Plus, you'll learn which ones I suggest and how much you should be contributing to them!

 10 Best Retirement Accounts to Retire Rich

10 Best Retirement Accounts to Retire Rich

Are you saving for retirement? Have you opened your retirement accounts? If not it’s time to start.

Everyone knows they should be saving for retirement, but it can be daunting to get started when there are so many confusing options.

You may be thinking, I’ll just save money in my savings account. Yes, you could do that, but you won’t get any of the benefits these retirement accounts give you.

Retirement accounts have various tax benefits that make them worth it. I’ll show you what those are next section.

I’m going to break down your options and try to make it as simple as possible. By the time you get done with this post, you’re going to know your retirement options and be ready to make a smart decision on what accounts you are going use.

The 10 Best Retirement Accounts

401k

  • Contribute up to $18,500 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Offered by an employer
  • Can rollover into a new 401k, Solo 401k, 403b, IRA

Roth 401k

  • Contribute up to $18,500 per year
  • Pay taxes on deposits
  • Pay no taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Offered by an employer
  • Can rollover into a new Roth 401k, Roth IRA, Roth 403b

Solo 401k

  • Contribute up to $55,000 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Sole Proprietor can open
  • Can rollover into a new 401k, Solo 401k, 403b, IRA

403b

  • Contribute up to $18,500 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Offered by a non-profit employer
  • Can rollover into a new 401k, Solo 401k, 403b, IRA

Roth 403b

  • Contribute up to $18,500 per year
  • Pay taxes on deposits
  • Pay no taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Offered by a non profit employer
  • Can rollover into a new Roth 401k, Roth IRA, Roth 403b

IRA

  • Contribute up to $5,500 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Anyone Can Open
  • Can rollover into a new 401k, Solo 401k, 403b, IRA

Roth IRA

  • Contribute up to $5,500 per year
  • Pay taxes on deposits
  • Pay no taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Anyone Can Open
  • Can rollover into a new Roth 401k, Roth IRA, Roth 403b

SEP IRA

  • Contribute up to $55,000 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Sole Proprietor can open
  • Can rollover into a new 401k, Solo 401k, 403b, IRA

Simple IRA

  • Contribute up to $12,500 per year
  • Pay no taxes on deposits
  • Pay taxes on withdrawals
  • Can withdraw at 59 1/2 years old
  • 10% penalty if withdrawn before age requirement
  • Offered by an employer
  • Can rollover into a new 401k, Solo 401k, 403b, IRA with time restrictions

HSA

  • Contribute up to $3,450 per year as an individual
  • Contribute up to $6,850 per year as a family
  • Pay no taxes on deposits
  • Pay no taxes on withdrawals
  • Can withdraw at 65 years old
  • 20% penalty if withdrawn before age requirement
  • Anyone with High Deductible Health Insurance Can Open
  • Can rollover into a new HSA

Best Retirement Accounts Comparison Chart

 Best Retirement Accounts Comparison Chart

Best Retirement Accounts Comparison Chart

 

Which Retirement Accounts Are Best For You?

Now that you know what type of retirement accounts are out there, you’re probably wondering which retirement accounts are right for you.

First off, you need to understand that you can have as many 401k’s and IRA’s as you’d like but the contribution limit applies to all of them. No matter how many 401k’s or IRA’s you have you can only contribute the annual contribution limit.

Roth vs Non-Roth

Basically, non-Roth accounts allow you to contribute money without paying taxes on that money. The downside is you will have to pay taxes on the money when you decide to withdraw in the future. You will most likely have a lot more money in there as it has grown in your investments, so you’re paying taxes on a much larger amount of money.

With Roth accounts, you pay normal taxes on your income and then deposit into your Roth retirement accounts. That money grows as it is invested and you don’t have to pay taxes when you withdraw, which is most likely a lot more money.

My personal preference is to use Roth accounts because I’d rather pay taxes now on the smaller amount and withdraw tax-free on all my gains over the years.

Each person has a different situation so you may want to check with a financial advisor to verify that is your best option.

In most cases, I suggest you invest in all 3 types of investment accounts and use the Roth option if it is available:

1. Contribute to at least 1 Roth 401k or Roth 403b depending on which ones you are eligible for.

2. Contribute to at least 1 Roth IRA depending on which ones you are eligible for.

3. Contribute to at least 1 HSA if you are eligible.

How Much Should I Contribute To My Retirement Accounts?

In the ideal situation you would max out your Roth 401k, max out your Roth IRA, and max out your HSA. If you have the income, do it! That’s an amazing investment for your retirement.

The reality though is that most people don’t have enough income to max out their retirement accounts. 

Depending on your income situation here are 3 retirement contribution plans I recommend for most people (if you're self-employed you can contribute even more in the Solo 401k and SEP IRA and highly recommend it if you can):

Option #1 The Best Plan

  • Roth 401k - $18,500 per year
  • Roth IRA - $5,500 per year
  • HSA - $3,450 (if you have a family you can contribute $6,850)

Option #2 The Great Plan (25%)

  • Roth 401k - 10%
  • Roth IRA - 10%
  • HSA - 5%

Option #3 The Good Plan (15%)

  • Roth 401k - 10%
  • Roth IRA - 3%
  • HSA - 2%

Action Steps

  1. Open a Roth 401k or other applicable 401k.
  2. Direct deposit at least 10% of your income to your 401k.
  3. Open a Roth IRA or other applicable IRA.
  4. Direct deposit at least 3% of your income to your IRA.
  5. Open a HSA account if you qualify.
  6. Direct deposit at least 2% of your income to your HSA.

If you love what you're reading, please help me spread the word and share this post with the share buttons on the left!


THE BADASS MONEY BUNDLE.png

DOWNLOAD FOR FREE

Enter your email address below and gain instant access via email.


KristaDaveColor060.jpg

DAVID SHEPHERD

CREATOR OF LET'S AUTOMATE YOUR MONEY WITH MY LOVELY WIFE KRISTA


RELATED POSTS