IRA vs Roth vs 401(k): Which Do You Pick?

All offer great tax breaks as you save for retirement. In addition, there are 403(b), SEP and SIMPLE plans and more. But don't worry. It’s hard to go wrong.

The words, letters and numerals Roth, IRA and 401(k) on blocks sitting atop stacks of coins.
(Image credit: Getty Images)

For the past 20 years, a majority of Americans have saved and invested for retirement on their own because company pension plans are largely a thing of the past. Living on Social Security alone during retirement isn’t appealing for most of us, since the maximum benefit is around $46,000/year for 2024. But how much and where should we invest for retirement?

The short answer: Most people should be saving and investing about 15% of their annual income into a retirement savings/investment plan, such as an IRA or 401(k) or 403(b), or some combination.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Scott McClatchey, CFP®
Senior Wealth Advisor, Ballast Rock Private Wealth

Scott joined Ballast Rock Private Wealth (BRPW) as a Senior Wealth Advisor and CFP® (Certified Financial Planner) in October 2023. At BRPW, Scott specializes in financial planning, wealth management and investment strategies for accredited individuals, families, professionals, business owners and company executives. He became a CFP® in 2011, enabling him to offer a broader array of services spanning investments, insurance, retirement planning, estate planning and tax mitigation strategies. 2019 through 2024, Scott has won the Five Star Wealth Manager award from Five Star Professional.