Retirement sounds like fun. Saving for it, a little less.
How much you need to save for retirement and where you should save are questions without single answers. For previous generations, retirement planning was a little simpler: Your workplace provided a pension plan where your contributions were determined and invested for you. Now, pensions are rare outside of the public sector, and many of us will retire with only our self-invested money and Social Security.
To calculate your goal, the traditional rule of thumb is to add up your annual expenses and multiply that number by 25, with the expectation that you’ll withdraw about 4% of your portfolio each year in retirement. $1 million used to be considered the “magic number” for retirement savings, but seven figures don’t go as far as they used to — especially in expensive places like California. Golden State respondents to a 2025 Northwestern Mutual survey on retirement said they would need an average of $1.47 million saved to comfortably retire here.
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But don’t feel bad if you’re not close to it. Somewhere between a quarter and nearly half of Americans have $0 saved for retirement, and only about 2.5% reach $1 million in retirement accounts. If you have something set aside for retirement, you’re ahead of a lot of people.
A financial planner will be able to help you figure out what number is right and realistic for you. But for now, we want to focus on where you should be saving your money.
Lauren Stansell, a certified financial planner and director of planning for financial services firm Yeske Buie in San Francisco, said that when she works with people early in their retirement savings journey, she uses these milestones as a guide.
Getting a 401(k) match for their employer:Contribute whatever percentage you need to get the minimum match from your work. If you don’t, you’re leaving money on the table. Employer match percentages vary widely, with a median promised match of 4%, according to a 2025 Vanguard report. Based on how your plan is structured, that means you’ll need to contribute about 4% to 6% of your pre-tax income to match. Contact your HR representative to find out exactly how much you need to contribute to get the match.
Putting 10% to your 401(k): “An incredible place to be, especially as a young person,” she said.
Maximizing their 401(k) contributions:That means contributing the percentage needed to get as close as possible to the maximum personal contribution limit in a 401(K), which is $24,500 in 2026 if you’re under 50. Note: Your employer’s contributions don’t count towards this maximum – there’s a separate limit for that.
If you’re over 50, you can contribute an additional $8,000 in “catch-up” contributions in 2026, and potentially up to $11,250 in “super-catch-up” contributions if you’re between 60 and 63 and your plan allows it.
Most professionals will tell you to focus on your 401(k) before putting retirement funds anywhere else. But once you’re on solid ground in your 401(k) — which could be getting employer match or fully maxing out, depending on your strategy — there’s more room to save.
Who is it for: People who want to make after-tax contributions to their pension funds through a tax-advantaged special individual pension account.
Unlike a 401(k), where you put in pre-tax contributions, Roth IRA money is after-tax. This means you won’t pay income taxes on the principal or earnings when you make qualified withdrawals from the retirement account. Depending on what you think your income level will be in retirement, you may want to prioritize Roth IRA contributions before limiting your 401(k) because qualified withdrawals are not taxable income.
Things to know: The most you can contribute to an IRA (Roth, traditional, or any combination of both) is $7,500 for 2026, with another $1,100 allowed in catch-up contributions if you’re 50 or older.
The major disadvantage of the Roth IRA is the income limit. For singles or heads of household in 2026, you can contribute the maximum amount if you have a modified adjusted gross income of less than $153,000; the total allowed stops until you reach $168,000 MAGI. If you’re married and filing jointly, you can contribute a maximum of $242,000 or less of MAGI, phasing out $252,000.
Making that much money puts you in the top 10% of earners in the United States, but in the Bay Area, those salaries might not seem like they go very far.
Who is it for: People whose income is too high for a Roth IRA but want to take advantage of the tax advantages.
Things to know: The basic strategy is that you contribute up to the Roth IRA limit in after-tax money to a traditional IRA with no balance and then convert it to a Roth, which anyone can do regardless of income level. These can get complex if you have other pre-tax IRA balances; A tax professional can tell you more about the IRS pro-rata rule and other considerations.
Who is it for: Very high earners who want to roll a lot of money into a Roth.
Things to know: You must be in a specific 401(k) plan that allows this. A mega backdoor Roth allows you to take advantage of the total 401(k) contribution limit to make after-tax contributions of up to $72,000 or more, depending on your age. Talk to your 401(k) plan administrator to find out if this is possible, how it would work, and how much you could contribute after employer contributions and employee deferrals. And this is another great opportunity to talk to a tax professional so you don’t make costly mistakes.
Who is it for: People who want to invest pre-tax money to pay for health care costs. The money can be used now or in retirement or any time in between.
Things to know: Your health care plan must be a high-deductible health plan (HDHP) eligible to use a health savings account (HSA). Qualified contributions, earnings and withdrawals are all tax-free (what’s known as the “triple tax advantage”). Unlike flexible spending accounts, you don’t have to use the money you’ve contributed within a set period of time. Some people keep receipts for medical expenses during their working years, then pay them back in retirement.
The contribution limit for 2026 is $4,400 if you cover yourself and $8,750 if you cover a family. If you’re 55 and older, you can make an additional $1,000 contribution annually.
Who is it for: People who are self-employed or run a business and want to set up and contribute to simplified retirement savings plans.
Things to know: The business makes the contribution, not the individual. Contributions are tax deductible and growth is deferred. Simplified employee retirement IRAs are typically easier to set up and have lower administration costs than running a 401(k) plan. Up to 25% of each employee’s salary can be contributed to the SEP IRA, with a maximum contribution of $72,000 in 2026.
There are a few investment opportunities more commonly found in the technology industry. If your employer offers them to you, you’ll want to talk to your financial advisor or tax planning professional about the best way to take advantage of them.
Restricted Stock Units: Unlike getting regular company stock, RSUs are restricted — meaning they can’t be sold — for a certain period of time known as the vesting period. Once they are announced, you can treat them as regular actions.
Incentive action options: ISOs are basically your company, giving you the chance to buy shares of the company at a predetermined (usually discounted) price, called the exercise price or strike price. If you believe the company will grow in value, but can absorb the loss of the money you invested if it doesn’t, it may make sense to take advantage of ISOs to get as much of a stake in the company as possible.
Employee Stock Purchase Plans:These plans allow employees to buy company stock through payroll deductions, often at a discount.
Retirement probably isn’t the only thing you want to do with the rest of your life. Maybe you want to buy a house (or a second home), pay for your kids’ college, go on a once-in-a-lifetime trip—there are a lot of competing priorities for your money, and most of us don’t have enough to fund it all at once.
Think of it like the oxygen mask on an airplane, said Mary Clements Evans, a certified financial planner and author of the retirement planning book “Emotionally Invested.” That means you have to put your mask on yourself before you can help others. In real terms, it sounds like your retirement fund takes priority over helping your kids get a degree or buy a house.
“For most people, saving $30,000 in a retirement plan is a large portion of their earnings,” said Eric Flett, regional president and managing director at MAI Capital Management. “We don’t want to make it to the point where you don’t have enough cash flow to cover your regular living expenses. I don’t want you eating Top Ramen because all your money is going to go out the back door to your Roth and 401(k).”
Tracking your baseline expenses, getting an understanding of what you can expect from Social Security, and planning your financial goals for before and after retirement will help you get a clearer picture of your priorities. A well-maintained emergency fund will also help you get through tough economic times without having to tap into the money you’ve invested for the future.
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This article originally published at The 401(k) milestones everyone should hit as soon as possible — and the next steps to take once you pass them.
