At Fidelity, we believe that you should consider contributing the full amount of 401(k) elective deferral contributions required to receive the maximum employer match offered in your workplace retirement plan as your first priority, rather than leaving that money on the table. 401(k) deferrals are an easy way to start early and contribute regularly, with the convenience of payroll deductions.

For many savers, the simplicity and discipline of payroll deductions make the logical next step to maximize your 401(k) elective deferrals up to the 402(g) annual deferral limit, $19,500 for 2021 ($26,000 if 50 years or older). You could then open an IRA or another tax-advantaged retirement savings vehicle.

Having a mix of both pretax and Roth contributions can help create additional flexibility in retirement to respond to a great unknown—future tax rates. For people who expect income in retirement to be as high or higher than their current level, others who expect their tax rate in retirement to be higher than today, or younger people who expect steady income growth over their careers, Roth IRA contributions may be the better choice. But if you believe that your tax rates will be lower in retirement than they are now, you may want to prioritize pretax vehicles like the Traditional IRA. Our IRA Contribution Calculator allows you to answer a few questions and find out which one might be right for you.