Retirement Savings Accounts

Research says you need to save roughly 15% of your annual salary—but if you wait until you’re older to save, you will need to save more. The goal: to have an income that’s 75% to 80% of what you brought in the year before you retired.

You’ll need to scale back, downsize, and possibly continue working part-time. Taking a roommate may help—and a reverse mortgage is an option if you own your home.

Just start—and take advantage of employer-based matching funds in your 401(k) if you have one. If not, consider a Roth IRA if you qualify, or a traditional IRA if you want the tax deduction. Brokerage firms have many options to explore.

You can contribute to your Health Savings Account until you start taking Medicare and take tax-free withdrawals to pay qualified medical expenses. This is better than 401(k) and traditional IRA distributions, which are taxable.

Public-sector and not-for-profit organizations cannot offer 401(k) plans. A 403(b) plan is typically offered to employees of private nonprofits and government workers, including public-school employees. There are two different types of 457 plans—the 457(b) to state and local government employees and the 457(f) to top executives at nonprofits.

Even $1 million requires smart budgeting. Retirees will probably do better and have more flexibility if they invest in a traditional portfolio and take yearly withdrawals rather than buy an annuity.