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For many people retirement planning often takes a backseat to more immediate financial concerns. That’s understandable. But saving for retirement is actually easier the sooner you start: It gives your money more years to grow.
Another retirement planning problem many people face is not knowing how to start. This article will help with that. It will tell you about:
- The retirement savings plans your employer might offer.
- How to sign up for a retirement savings account.
- Starting your own plan.
- How much to contribute.
- What to do if you’re self-employed.
- Investing your retirement savings.
Ideally, you are starting this process during the beginning of your career. (Related: A financial checklist for your first job)
But late starts do happen. Indeed, you might wish that you had set up your plan five, 10, or even 20 years ago — but what’s done is done. The next-best time to start your plan is today.
Your first step is to gauge what you are likely to need for retirement income. Start here…
With those numbers in mind, look at the retirement savings options available to you.
Employer retirement plan options
Not all employers offer their workers a retirement plan, but here’s a list of the types of plans you might have access to, depending on your employer.
- 401(k), Roth 401(k): private sector companies
- 403(b): public schools and nonprofits
- 457: state and local governments
- Thrift Savings Plan: federal government.
- SEP IRA: small, private sector companies
- SIMPLE IRA, SIMPLE 401(k): small, private sector companies with fewer than 100 employees
Many companies automatically enroll new employees in qualified retirement plans because it dramatically increases employee participation. Indeed, recent laws require most employers to automatically enroll new workers in their retirement plan at an annual contribution rate of at least 3 percent of their income, but not more than 10 percent. There are exceptions for small businesses.
If for some reason you aren’t already enrolled, getting signed up is typically as simple as talking to your company’s human resources department and filling out a form that specifies what percentage of your salary to contribute. Your employer will automatically deduct it from each paycheck, on a pretax basis, and place it in your retirement account. (Learn more: Retirement plan contribution limits: Your need-to-know)
Individual retirement accounts
Some employers, particularly small businesses or other limited enterprises, do not offer a 401(k) or similar defined contribution retirement plan. If you find yourself in this category, you’ll need to take saving for retirement into your own hands.
You have two options:
- Traditional IRA: contribute pretax dollars.
- Roth IRA: contribute after-tax dollars.
The best thing about these accounts is that they give you complete control over where to put your money. You decide what brokerage firm to use and what fees you’re willing to pay. Plus, you’ll have thousands of investments to choose from. (Learn more: DIY planning for retirement with IRAs)
IRAs have several big downsides, however:
- Low contribution limits: You can only contribute about one-third ($7,500 in 2026, with a catch-up contribution limit of $1,100 for those age 50 and older) of what you can contribute to an employer-sponsored retirement account ($24,500 in 2026, with a catch-up contribution limit of $8,000 for those age 50 and older).
- Traditional IRA deduction limits: You may be able to claim a deduction on your federal income tax return for the amount you contributed to your IRA, but this depends on your tax-filing status, your modified adjusted gross income, and whether you are covered by a retirement plan at work. (Analysis includes whether your spouse is covered by a plan at work.)
- Income limits: The ability to make contributions to a Roth IRA may be limited based on your income and tax-filing status. For 2026, if you’re single and earn $168,000 or more, or if you’re married and earn $252,000 or more, you can’t contribute to a Roth IRA.
If you’re putting pretax dollars into a workplace retirement savings plan, it usually makes sense to give yourself tax diversification by choosing a Roth IRA for your individual plan. However, if you don’t have a workplace plan, should you choose a Roth IRA, traditional IRA, or both? (Related: Traditional vs. Roth IRAs)
“Whether you save pretax or after-tax dollars depends on a few factors and it isn’t always cut and dry,” said Brandon Renfro, assistant professor of finance at East Texas Baptist University and a fee-only financial professional in Marshall, Texas. “The main thing to think about is your tax rate. Do you think it will be higher now or in retirement? If you think your tax rate is higher now, then ... you should save pretax.”
The problem with making any assumptions about your future tax rate is that the government can always change tax rates.
· For example, in 1990 a married couple earning more than $32,450 fell into the 28 percent tax bracket.
· In 2025, a couple at that same income level, adjusted for inflation, fell into the 12 percent tax bracket.
Renfro said that, generally, the earlier you start saving, the more you save from each paycheck, and the higher the return you achieve, the more likely your tax rate will be higher in retirement and then Roth contributions make more sense.
Conversely, he explained, “If you’ve waited a long time to start, don’t save much, and are very conservative and earn a low rate of return, it probably makes more sense to make pretax contributions.”
Some people opt to consult a financial professional to help sort out what options might be best for their age and situation.
Connect with a MassMutual financial professional
How to prioritize retirement contributions
Retirement experts generally recommend prioritizing your retirement plan contributions like this:
- Contribute enough to your employer-sponsored retirement plan to get any company match.
- Contribute the maximum to a traditional IRA and/or a Roth IRA, if you can.
- Continue contributing to your employer-sponsored plan up to the annual maximum.
If you don’t contribute enough to your employer plan to get the full match, you’re throwing away free money, said Chartered Financial Analyst ® Lou Haverty, owner of Financial Analyst Insider, a website for aspiring financial industry professionals.
Here’s how matching contributions work.
“In most cases, your employer will set the match based on a specified contribution percentage you make to the plan,” Haverty explained. “They may offer to match 100 percent of your first 6 percent that you contribute from your income.”
For example, if you earn $100,000 and contribute 6 percent, or $6,000, your employer will kick in another $6,000 in this scenario.
Matching contributions may have limitations. If you leave the company for any reason, you might receive a partial match or no match, depending on your employer’s vesting schedule and how long you’ve contributed to the plan.
“Some employers may make you wait one to five years before you qualify for the match,” said Michael Foguth, president and founder of Foguth Financial Group in Brighton, Michigan.
Experts then usually recommend contributing to a traditional or a Roth IRA, if you can. The Roth could be particularly useful because many experts think the ability to withdraw tax-free dollars from a Roth in retirement has an edge over paying taxes on 401(k) or traditional IRA withdrawals in retirement.
Of course, not everyone can contribute to a Roth IRA. And for many, the “set it and forget it” routine with an employer-sponsored plan can be easier versus having to be diligent about saving for Roth IRA contributions. Indeed, the “set it and forget it” approach makes it easy to contribute to your employer-sponsored plan up to the maximum. Be careful not to go beyond the maximum, however, as it has tax consequences.
Retirement plans for the self-employed
If you earn profits as an independent contractor, you’d be remiss not to open a self-employed retirement account. (Learn more: Freelancer’s benefit checklist)
For example, with a solo 401(k), not only can you contribute up to the annual limit of $24,500 in 2026, but you can also make profit-sharing contributions of up to 20 percent of compensation as defined by the plan. You can also contribute an additional $8,000 if you are 50 or older or an additional $11,250 if you are 60, 61, 62, or 63.
The major brokerage firms make these plans straightforward to set up, contribute to, and manage.
Investing retirement contributions
The next set of decisions you’ll need to make is how to invest your retirement contributions.
Generally, the more years you have until retirement, the more risk you can take with your investments. That means you might tilt the balance of your portfolio more toward stocks and away from bonds. (Learn more: Understanding your risk profile)
Taking more risk, up to a point, has been correlated with higher returns. Historically, stocks have earned an average of eight to 10 percent per year, while bonds have returned about half as much. Many people will need the higher return potential stocks can offer to accumulate enough for retirement.
Diversification is another key to retirement planning that you should be familiar with.
“Your asset allocation — mix of stocks and bonds — is the most important part of the investment plan,” Renfro said. “Choose investments that are low cost and broadly diversified.”
Mutual funds (of which index funds are a type) and exchange-traded funds let you invest in a large number of stocks or bonds without having a large sum to invest and without having to research individual stocks and bonds. Funds make it easy to start investing and keep investing even if you don’t have a lot of investing knowledge or extra time. (Learn more: Mutual fund and ETF basics)
Conclusion
Many people aim to save up 15 times their annual income for retirement. But today, the best thing you can do is get started.
Enroll in your employer’s plan, open an IRA, or start a self-employed plan. Save as much as you can, and invest the money in a low-cost, broadly diversified portfolio of stocks and bonds that takes on enough risk to earn the returns you need — but not so much that you can’t sleep at night.
Before you know it, you’ll have a nest egg to be proud of and you’ll be well on your way to meeting your retirement goals. If you ever have questions, MassMutual’s financial professionals are here to help.
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Frequently Asked Questions about starting a retirement plan
Q. How much should I contribute to my retirement plan?
A. Many experts suggest aiming to save 15% of your annual income for retirement, including any employer match. If that's not possible right now, start with what you can afford and gradually increase your contributions over time. (Learn more: Strategies to boost your retirement savings)
Q. What is the difference between a 401(k) and an IRA?
A. A 401(k) is an employer-sponsored retirement plan, often with matching contributions, while an Individual Retirement Account (IRA) is an account you open on your own. Both offer tax advantages, but 401(k)s generally have much higher annual contribution limits.
Q. What if my employer doesn't offer a retirement plan?
If you don't have access to a workplace plan, you can open a traditional or Roth IRA through a brokerage firm. If you are self-employed, you have additional options like a SEP IRA or a solo 401(k).
Discover more from MassMutual...
Why funding your IRA early might help you maximize your return
Setting financial goals: Retirement
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