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5 retirement savings plans that are better investments than anti-aging lotion

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Saving for retirement is kind of like investing in a good under-eye cream. We all know we should set aside some time and money to do it while we’re younger, but we also tend to put off taking the first step toward finding the right option. If you’re like most of us who live a life of procrastination, you probably know that neglecting important items can lead to some pretty big consequences. In the case of putting off saving for retirement, the consequences could potentially be a lot more serious than the few wrinkles you’ll gain by putting off the task of finding the right under-eye cream.

More: 4 ways to plan for retirement without it hindering your everyday life

To help you weigh your retirement savings options, I’ve collected information and resources for some of the most popular savings options currently available.

1. 401(k)

A 401(k) plan is a savings plan that many employers offer their employees as an incentive. These defined contribution plans allow you to put money toward your retirement on a tax-deferred basis. This means you will not need to pay federal or state income taxes on your savings or their investment earning until retirement. It’s likely that your taxable income at retirement will be lower than it is currently while you’re employed, which would mean the taxes you’d pay after you took out your 401(k) would be significantly lower.

If you choose to change jobs during your working years, you will need to decide what you’d like to do with your funds. You can either leave them where they are, take them with you or cash out. Ameriprise has some pretty good resources available for you to check out when it comes time to decide what you want to do with your funds.

Practical Money Skills has an excellent intro guide to 401(k)s if you’re interested in finding out more about this savings option before you speak with your employer about eligibility.


If you’re self-employed, a SEP IRA might be a good option. SEP stands for Simplified Employee Pension. Any business owner with one or more employees or any worker with a freelance income can open this type of savings account. If you’re not self-employed but work for a small business, this is also something you could potentially bring up to your employer as small-business owners can provide SEP IRA options for their employees to allow them to put away money for retirement. The main drawback with this option is that the funds are tax-detectable; however, the contribution limit is elevated so employers or employees can contribute up to 25 percent of income or $53,000 (whichever is less). Like a 401(k), you can also transfer a pension fund if you choose to switch employers in the future.

The U.S. Department of Labor offers a pretty thorough resource on SEP retirement plans if this seems like it might be your best fit for retirement savings.

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3. myRA

This savings option was created as an initiative by President Obama to encourage more Americans to start saving for the future. It offers an affordable and accessible option for individuals who don’t have access to an employer-sponsored savings plan like a 401(k) or a small business SEP IRA. Although this is a fantastic option to get started on saving, it is not intended to be used as your sole savings fund. You can save up to $15,000 and keep it in the fund for 30 years, which means you’ll need to look into other savings plans once you’ve hit the 30-year mark or exceeded the savings limit.

If you haven’t started saving and don’t have an option with your employer, setting up an myRA could be a fantastic way to jumpstart your retirement savings plan.

4. IRA

There are several types of IRA accounts (as you probably noticed by the mention of the SEP IRA above). A traditional IRA provides a savings option that may be tax exempt until you withdraw the funds upon retirement. This type of IRA is set up by a financial institution and grows interest over time. You could also choose a Roth IRA, which would grow from funds that you contribute after taxes so that you can avoid paying taxes on the funds when you withdraw them.

IRA accounts are a great option for those looking to supplement their 401(k) savings with additional funds in the future. Fidelity Investments offers a pretty thorough guide here if you are looking for more information on this savings option.

5. Health savings account

An HSA or health savings account is an excellent option for individuals with high-deductible health insurance. It allows you to save up to $3,500 a year tax-free as an individual or $6,650 for families. Those 55 and over can save an additional $1,000 per year.

With this account, you can withdraw penalty-free funds prior to retirement so long as the money is spent on healthcare costs like copays or products such as eyeglasses. However, if you choose to withdraw the money for a purpose unrelated to healthcare prior to retirement, the money will be taxed and you will be a charged a 20 percent penalty fee. If you choose not to use the funds for medical expenses, you can invest them in retirement just as you would with the other savings options.

The Mayo Clinic has provided a great article on HSAs to help individuals decide whether or not the option might be right for them. I recommend checking this out if you’re considering this savings option.

Now that you’ve got a basic understanding of some of the most popular retirement savings options, take some time to think of which option might be best for your specific needs. If you’re still at a loss, I recommend checking in with a financial adviser at your place of employment or at an outside firm. Most financial firms will offer a free consultation to help you understand your options and pick a plan that fits you best before helping you set up a savings plan.

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