How to max out your retirement savings

Women face a financial gender gap in retirement. These steps can help you save what you’ll need.

Why are women more likely to need more money—and have less saved—for retirement?

Financial realities such as a likelihood of living longer, higher health care costs, the pay gap, the investing gap, and time out of the workforce can all be factors. That's why saving and investing as much as possible can be a smart way to help close the retirement gender gap.

Contributing to your workplace retirement account up to the employer match


Remember that you will need to elect where your contributions are invested. Review your plan documents to see what options are available to invest your savings.

If you have a retirement plan through an employer (for example, a 401(k) or 403(b)) find out if they have a "match." This means they'll match your contributions up to a certain amount each year. This amount might be a percentage of your contributions, a percentage of your salary, or a certain dollar amount.

Once you find out their policy, do the math to understand how much you'd need to contribute to reach the maximum employer match. That's like free money! Next, find how long you need to work there to keep the money they give you (often called "vesting"). But once it vests, it's yours forever.

Fidelity believes you should contribute at least enough to your employer's plan to get the match.

FAQ: Should I contribute to a 401(k) or Roth 401(k)? Both have benefits, but picking one and contributing is what's most important. You can even split your contributions between the two.

Consider contributing to your health savings account (HSA) to the maximum

Plan to save additionally—and separately—for health care costs in retirement. Consider using an HSA if you are enrolled in an HSA-eligible health plan. With an HSA, you can often split your contributions into invested money (which can be used for long-term savings for health care costs in retirement) and cash (so you can pay for your qualified medical expenses directly from your account). You can get 3 tax benefits for contributions: An initial tax deduction for your contributions, tax-free potential earnings, and tax-free withdrawals when you use the money for qualified medical expenses.1

Find out how much you can contribute and if you can, try to reach that limit (for 2022, it's $3,650 for individuals or $7,300 for families). Once the money is in your account, don't forget to choose your investments—investing is how your money has the potential to grow over time. This is particularly important to think about for women, who have higher health care costs in retirement and are more likely to need long-term care.2

FAQ: What if I want to spend the money in my HSA on expenses right now? Consider talking to a financial professional about how to balance what you need right now versus saving for the future.

Consider contributing to your workplace savings plan to the maximum allowed

If you've contributed up to the employer match, you may be ready to save more for retirement. Consider maxing out your 401(k). For 2022, 401(k) contributions are $20,500 or $27,000 (if you are 50+).

Because of the gender pay gap, women are often earning less—so basing contributions on a percentage of earnings means contributions could be lower. That's one reason why it might make sense to aim for the maximum allowed. If you can't afford to go up to the maximum yet, Fidelity believes in aiming for 15% of your pre-tax salary (including your employer's contributions). If you can't afford the 15%, figure out what you can afford, then you can always increase it whenever you get a raise or promotion.

FAQ: What if my employer has a profit-sharing program that goes into my 401(k)? There is a limit to how much you and your employer can contribute in total into your retirement accounts each year. If, for example, your employer has a profit-sharing program which gives you significant 401(k) contributions, it could be possible for your personal yearly maximum to be lower than $20,500/$27,000. That's because your employer will have used some of the combined total.

Consider contributing to an IRA (a Roth IRA, traditional IRA, and/or a rollover IRA) up to the maximum

Another retirement savings option is an individual retirement account (IRA). These are not connected to an employer, and you can contribute in addition to your employer's plan.3

There are several IRA options, with different benefits and requirements. You can contribute to 1, 2, or even all 3, as long as your combined contributions don't go beyond either your earned income or what the IRS allows. (For 2022, it's $6,000 or $7,000 if you are 50+.)

FAQ: How do I choose an IRA? It depends on what you're looking for, but there are a few ways to narrow it down. A rollover IRA is where you can move your old workplace plans, but you can also contribute to it yourself once it's set up. A Roth IRA and traditional IRA are quite different from each other, so you might want to check out this handy comparison chart.

Add after-tax money to your 401(k)

Your employer might allow you to add after-tax money into your 401(k)—if so, you can contribute beyond your $20,500/$27,000 individual limit and go up to the 2022 limits of $61,000/$67,500 (50+).

There are several potential strategies for what to do with after-tax 401(k) contributions, including converting that money into a Roth 401(k) after it's in the account. If you are considering this option, consider talking to a financial professional.

FAQ: Can I access this money once it's in my retirement account? Yes—after-tax contributions can be withdrawn without taxes or penalties at any time.

Consider investing in brokerage accounts

Great—you've maximized your contributions to tax-advantaged retirement accounts! You can keep saving and investing in regular brokerage accounts. The tax advantages won't be the same, but you'll still have the potential for long-term growth, not to mention flexible access to the money if you need it. And there's no limit to how much you can invest, so you can keep moving toward the future of your dreams.

How do you choose how and where to invest? A good first decision point is whether you want to choose and manage your own investments or whether you want a professional to do it for you.

Want to do it yourself? Use our step-by-step guide to choosing and managing your own investments.

Want a professional to choose and manage your investments? We have a wide range of professionally managed options to choose from, including accounts with $0 advisory fees and no minimum balances, all the way up to dedicated advisors.

FAQ: Is investing outside of retirement risky? There are a wide range of ways to invest, including some that are more aggressive and some that are lower risk. It's smart to make sure you invest based on what makes you comfortable, for the long term, and that you are diversified (have a range of investments so that all of your eggs aren't in one basket).

Next steps

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