No Room Left for your 401(k)?
Investing in a 401(k) is a great way to build money for retirement, especially if your employer matches a portion of your contributions, but contribution limits do apply. What happens if you are contributing everything possible to your 401(k)? Where should you invest next, especially if you are focused on building a retirement nest egg?
If you haven’t already, you (and your spouse, if you are married) can put $5,000 a year into a Roth IRA. While the money you put in is not tax-deferred, the earnings are, meaning you can make withdrawals tax-free when you retire.
You can also put money in a non-deductible IRA, but then you lose some of the tax advantages.
If saving for retirement is your primary investment goal, put your money in tax-deferred and tax-advantaged investments. After all, what you earn is certainly important, but what you keep is crucial.