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Planning for retirement can feel overwhelming, but the right investment plan makes all the difference. Whether you’re just starting out or catching up, these seven options offer a mix of growth potential, tax advantages, and security. Let’s look at each one, including how much you can contribute and who they work best for.
1. 401(k) Plans: The Employer-Sponsored Powerhouse
A 401(k) is often the first stop for retirement savers. In 2025, the contribution limit is $23,000, with an extra $7,500 catch-up if you’re 50 or older. Many employers match a percentage of your contributions—free money you don’t want to leave on the table. For example, if your company matches 50% of the first 6% you contribute, putting in that 6% instantly earns you a 50% return.
Invest in low-cost index funds within your 401(k) to keep fees low. Over 30 years, even a 1% fee difference can eat up tens of thousands of dollars. If you’re unsure which funds to pick, check out our guide on top 7 stock market strategies for long-term growth ideas.
2. Traditional IRA: Tax Deductions Now, Taxes Later
A Traditional IRA lets you deduct contributions from your taxable income today, then pay taxes when you withdraw in retirement. For 2025, you can contribute up to $7,000 ($8,000 if 50+). The catch? You must have earned income, and if you or your spouse have a workplace plan, deductibility phases out at higher incomes.
This plan works well if you expect to be in a lower tax bracket after retiring. Consider pairing it with a Roth IRA for tax diversification.
3. Roth IRA: Tax-Free Growth, Tax-Free Withdrawals
With a Roth IRA, you contribute after-tax dollars, but qualified withdrawals are completely tax-free. The same contribution limits apply as a Traditional IRA ($7,000/$8,000), but income limits restrict who can contribute directly. In 2025, single filers earning over $165,000 can’t contribute fully.
Roth IRAs are ideal if you expect higher taxes in the future. Plus, you can withdraw your contributions (not earnings) anytime without penalty—giving you flexibility. For more details on different retirement accounts, see our overview of top 7 retirement plans.
4. Solo 401(k): For Self-Employed and Small Business Owners
If you’re self-employed, a Solo 401(k) lets you contribute as both employee and employer. Employee contributions: up to $23,000. Employer profit-sharing: up to 25% of compensation, making the total limit $69,000 in 2025 ($76,500 if 50+).
You can also invest in alternative assets like real estate or private equity—something most workplace plans don’t allow. However, administrative duties fall on you. If that sounds like too much, consider using investment platforms for managing alternative assets to simplify the process.
5. SEP IRA: Simple, High-Limit Option for Freelancers
A Simplified Employee Pension (SEP) IRA allows employers (including self-employed individuals) to contribute up to 25% of net earnings, capped at $69,000 for 2025. Contributions are tax-deductible, and you don’t have to contribute every year.
SEP IRAs are easy to set up and have low administrative costs. But only employers contribute—employees cannot make their own contributions. If you hire staff, you must contribute the same percentage for them as you do for yourself.
6. Annuities: Guaranteed Income for Life
Annuities are insurance products that can provide a steady income stream in retirement. Fixed annuities offer a guaranteed return, while variable annuities invest in sub-accounts like mutual funds. For example, a 65-year-old investing $100,000 in a fixed immediate annuity might receive about $600 per month for life.
Annuities aren’t for everyone—fees can be high, and you lose liquidity. But they can be a valuable piece of a diversified plan, especially if you worry about outliving your savings. For low-risk options, check out our list of top 7 safest investments to balance your portfolio.
7. Real Estate Investment Trusts (REITs): Earn Without Being a Landlord
REITs allow you to invest in income-producing real estate without buying property yourself. Publicly traded REITs trade like stocks and often pay high dividends—averaging 4–6% yield. For instance, a $50,000 investment in a diversified REIT ETF could generate $2,500–$3,000 in annual dividends.
You can hold REITs in an IRA or 401(k), making them a flexible addition. They also offer diversification since real estate doesn’t always move with the stock market. For stock ideas that complement REITs, read our picks for top 7 stocks to invest in 2026.
Building a retirement nest egg doesn’t require perfection—just consistent action. Start with one plan that fits your situation, contribute automatically, and increase your savings rate over time. The best plan is the one you actually use.
