Key Takeaways:

• The best retirement plan for you depends on your employment type, tax strategy, and long-term goals.
• A diversified mix of investments—stocks, bonds, CDs, and mutual funds—helps balance risk as your needs evolve.
• Strategic moves like delaying Social Security or increasing contributions after age 50 can meaningfully boost your retirement income.

A strong retirement plan does more than prepare you for the future, it creates financial confidence today. With longer lifespans, rising healthcare costs, and the increasing need to support both younger and older family members, many households find it more important than ever to build beyond emergency savings. That’s why retirement planning is not only about your savings—it’s about creating financial stability for your family, your goals, and your future self.

Whether you’re early in your career, running your own business, or approaching retirement age, the right plan can help you build long-term security with less stress and more control.

Choosing the Right Retirement Plan for Your Employment Type

If You’re a Full-Time Employee: 401(k) & Roth 401(k)

Most employers offer a 401(k), which allows you to contribute pre-tax dollars directly from your paycheck. This lowers your taxable income today. If your employer offers matching contributions, take full advantage—this is essentially “free money” toward your future.

A Roth 401(k) works differently: contributions are made after taxes, but your withdrawals in retirement are tax-free. This option is especially useful if you expect to be in a higher tax bracket later on.

When changing jobs, remember you can roll your 401(k) into a new employer’s plan or into an IRA to keep your savings growing without penalty.

If You’re Self-Employed or a Small Business Owner: SEP IRA or Solo 401(k)

For small business owners and independent contractors, retirement planning can feel more complicated—but the right plan offers major advantages.

• SEP IRA: Simple structure, high contribution limits, and tax-deductible contributions.
• Solo 401(k): Ideal for consultants, freelancers, or one-person businesses. It allows both employer and employee contributions, enabling higher annual savings.

These options are particularly helpful for entrepreneurs juggling business expenses, cultural responsibilities, and long-term planning.

Plans Anyone Can Use: Traditional & Roth IRAs

IRAs are flexible retirement accounts available to most individuals.

• Traditional IRA: Contributions may be tax-deductible; taxes are paid on withdrawals later.
• Roth IRA: Contributions are made after taxes; withdrawals are tax-free in retirement.

A Roth IRA is especially attractive for younger earners or anyone expecting higher income in the future. Keep in mind that Roth IRAs have income limits affecting eligibility.

How Different Investments Work in a Retirement Portfolio

Savings alone don’t grow retirement wealth—investing does. Here’s how each investment type supports your long-term goals.

Mutual Funds & Target-Date Funds

Mutual funds pool money from many investors to buy a mix of stocks and bonds. They offer instant diversification and professional oversight.

Target-date funds automatically shift your investment mix as you approach retirement—providing growth early and stability later. These are ideal for hands-off savers.

Stocks & ETFs

Stocks offer the greatest long-term growth potential. Exchange-traded funds (ETFs) provide diversified stock exposure at lower cost.

Both are strong choices for long-term savers who want growth.

Bonds & Fixed-Income Investments

Bonds create stability and dependable income, making them useful as you get closer to retirement or want to balance higher-risk investments.

Certificates of Deposit (CDs)

CDs offer guaranteed returns with no market risk, making them excellent for conservative savers.

Find the Right Balance Between Risk and Stability

A strong retirement portfolio balances risk and safety. Your age, financial goals, and responsibilities guide how you divide your investments.

Age-Based Risk Guidance

A common rule of thumb is the “110 minus your age” method. At 40, you might keep roughly 70% in stocks and 30% in bonds and lower-risk investments.

This isn’t rigid—cultural expectations, family priorities, and unique financial needs all influence how much risk feels right.

Why Diversification Works

Diversification spreads your money across different types of investments. When one part of the market dips, another may rise, helping protect your progress.

Making a Retirement Plan You Can Stick To

You don’t need a complicated plan to see long-term success. What matters is consistency.
Here are simple ways to stay on track:

• Set goals that fit your lifestyle and family needs.
• Automate contributions to make saving effortless.
• Review your plan annually as life changes.
• Choose products that fit your timeline, like higher-growth options when younger or CDs and fixed-income later on.

Know Your Current Retirement Contribution Limits (2026)

As you build your plan, make sure you're taking full advantage of the IRS contribution limits for 2026. Even small increases each year can make a meaningful difference over time.

401(k), 403(b), and Most Employer Plan Limits (2026)

• Annual contribution limit: $24,500
• Catch-up contribution (age 50+): +$8,000
• Total possible for age 50+: $32,500

Traditional IRA & Roth IRA Limits (2026)

• Annual contribution limit: $7,500
• Catch-up contribution (age 50+): +$1,100
• Total possible for age 50+: $8,600

Note: Roth IRA contributions may be limited based on income. Check the latest IRS income phase-out ranges to confirm eligibility.

Start Building a Retirement Strategy That Supports Your Future

The best time to start planning for retirement is today. Whether you’re choosing your first retirement account, updating your investments, or strengthening long-term savings, thoughtful planning will give you more freedom and peace of mind.

Bank of Hope is here to support you with competitive savings options, easy digital tools, and teams who understand your community.