A 401(k) is an employer-sponsored retirement plan that lets you save pre-tax or Roth dollars from your paycheck Pre-tax contributions reduce your taxable income now and are taxed as ordinary income when withdrawn in retirement Roth 401(k) contributions use after-tax dollars, but qualified withdrawals in retirement are completely tax-free The 2025 employee contribution limit is $23,500, with an additional $7,500 catch-up for those age 50 and older Funds are generally not accessible without penalty before age 59 and a half, with limited exceptions

Start saving as early as possible because compound interest rewards time more than any other factor Always contribute enough to capture the full employer match in your 401(k) before other savings goals Understand the tax treatment differences between pre-tax 401(k), Roth 401(k), and Roth IRA accounts Automate your contributions so saving happens consistently without requiring ongoing willpower A financial advisor can help you determine the right savings rate and investment allocation for your specific goals

Retirement 101

Curated by: Rubric Advisors

Retirement 101

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The Power of Compound Interest

Compound interest means your investment earnings generate their own earnings, accelerating wealth growth over time
Starting at age 25 instead of 35 with $500 per month at 7% returns yields roughly $600,000 more by age 65
Time in the market is the single most important factor in building retirement wealth, not timing the market
Even small increases in your savings rate today have an outsized impact on your balance decades from now

401(k) Basics

A 401(k) is an employer-sponsored retirement plan that lets you save pre-tax or Roth dollars from your paycheck
Pre-tax contributions reduce your taxable income now and are taxed as ordinary income when withdrawn in retirement
Roth 401(k) contributions use after-tax dollars, but qualified withdrawals in retirement are completely tax-free
The 2025 employee contribution limit is $23,500, with an additional $7,500 catch-up for those age 50 and older
Funds are generally not accessible without penalty before age 59 and a half, with limited exceptions

Roth IRA Fundamentals

A Roth IRA is an individual retirement account funded with after-tax dollars that grows and can be withdrawn tax-free
The 2025 contribution limit is $7,000, or $8,000 if you are age 50 or older
Income limits apply: single filers begin phasing out at $150,000 and married filing jointly at $236,000 for 2025
Roth IRA contributions can be withdrawn at any time without taxes or penalties, providing flexibility
The backdoor Roth IRA strategy allows high earners to contribute indirectly through a traditional IRA conversion

Maximize Your Employer Match

Many employers match a percentage of your 401(k) contributions, commonly 50% of the first 6% you contribute
Not contributing enough to receive the full match is equivalent to leaving free money on the table
Employer matches are always made with pre-tax dollars regardless of whether you elect Roth contributions
Some employers use a vesting schedule where you must stay for two to six years to keep the full match
At minimum, contribute enough to capture 100% of your employer match before funding other savings goals

Getting Started: A Simple Framework

Step one: contribute at least enough to your 401(k) to get the full employer match
Step two: if eligible, max out a Roth IRA for tax-free growth and withdrawal flexibility
Step three: increase 401(k) contributions toward the annual maximum as your income allows
Step four: invest in a diversified target-date fund or balanced portfolio appropriate for your retirement timeline
Aim to save at least 15% to 20% of your gross income for retirement including employer contributions

Key Takeaways

Start saving as early as possible because compound interest rewards time more than any other factor
Always contribute enough to capture the full employer match in your 401(k) before other savings goals
Understand the tax treatment differences between pre-tax 401(k), Roth 401(k), and Roth IRA accounts
Automate your contributions so saving happens consistently without requiring ongoing willpower
A financial advisor can help you determine the right savings rate and investment allocation for your specific goals

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The Power of Compound Interest

401(k) Basics

Roth IRA Fundamentals

Maximize Your Employer Match

Getting Started: A Simple Framework

Key Takeaways

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Maximizing Your 401(k) Contributions

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The Power of Compound Interest

401(k) Basics

Roth IRA Fundamentals

Maximize Your Employer Match

Getting Started: A Simple Framework

Key Takeaways

Related Topics

Maximizing Your 401(k) Contributions

Roth IRA Rules and Limits

Social Security Optimization