401(k) vs IRA: Which Retirement Account Should You Prioritize?
The Simple Priority Order
Does your employer match 401(k) contributions? That changes everything.
Step 1: Contribute enough for the full employer match. This is free money.
Step 2: Max out a Roth IRA ($7,000 in 2026, $8,000 if 50+). Tax-free growth and better investment options.
Step 3: Max out your 401(k) ($23,500 in 2026). Tax deduction reduces current income.
The Power of Starting Early
$500/month at age 25 with 7% returns = $1.2 million by 65. Same amount starting at 35 = only $566,000. Time in the market beats everything.
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