Contributing to a retirement account qualifies you for tax breaks and employer contributions, both of which will grow your retirement much more quickly.
US News explains how to take full advantage of the 401(k) and individual retirement account perks you're eligible for in 2016 in "How to Maximize Your Retirement Accounts in 2016."
Max out your 401(k). You can contribute up to $18,000 to your 401(k) plan in 2016, which means saving $1,500 per month. Income tax isn't due on this money until it is withdrawn from the account.
Make catch-up contributions. Workers age 50 and older can contribute an additional $6,000 to a 401(k) plan in 2016, for a total contribution of $24,000. Hitting this 401(k) limit means you need to save $2,000 per month. If you do that, you'll reduce your tax bill by $6,000 if you are in the 25% tax bracket, and $8,400 if you pay a 35% federal income tax rate.
The employer match. If your company provides a 401(k) match up to 6% of pay, set up withholding for that amount. If you get a raise next year, increase your savings rate now so your take home pay is identical. Place the extra money in your company retirement plan. You won't even notice the difference!
Take advantage of IRAs. In addition to saving in a 401(k), you can defer income tax on another $5,500 that you contribute to an IRA next year. Remember that if you're 50 or older, you can contribute an extra $1,000 for a total of $6,500.
Consider a Roth. Roth IRAs have the same contribution limits as traditional IRAs, but they are treated differently for taxes, as there's no tax deduction for Roth IRA contributions. Investment earnings in the account aren't taxed, and withdrawals after age 59 1/2 are tax-free.
Claim the Saver's Credit. If you save in a retirement account and your adjusted gross income is less than $30,750 for individuals, $46,125 for heads of household, or $61,500 for married couples, you may be able to claim the saver's credit. Contributions of up to $2,000 ($4,000 for couples) could earn you a tax credit worth between 10% and 50% of your retirement account deposit.
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Reference: US News (November 23, 2015) "How to Maximize Your Retirement Accounts in 2016"