Annuity

This is a great way to save for retirement on a pre-tax basis. Of course, down the road the IRS will require distributions (called Required Minimum Distributions (RMDs)) for this account, at which time you will need to pay taxes.

There’s a limit to how much you can invest in a 401(k) each year. In 2024, you can contribute up to $23,000 per year to a 401(k). This goes for both Roth and traditional 401(k)s. If you make both Roth and traditional contributions, the total amount must not exceed $23,000. If you are 50 years old or older you can make additional “catch-up” contributions of up to $7,500 per year, for a total of $30,500.

Many companies match employee contributions. You will need to check your plan.

Action: Review your company plan. Try to save as much (or more) as 15% of your annual income.