Warning: Vanguard.com will not work properly with JavaScript disabled!
Vanguard - FAQs - Retirement

Help Center  »  Retirement

Retirement FAQs—General

What's a good strategy for saving for retirement?

How can Vanguard help me save for retirement?

How early should I begin saving for retirement?

How will I know if I'll have enough money to retire?

What's a good strategy for saving for retirement?

Generally, if you have access to an employer plan, such as a 401(k) or 403(b)(7), you should first contribute enough to get the company match. That's free money you can use to boost your retirement savings.

Next, max out your IRA contributions. Unless you're in the top tax brackets, a Roth IRA offers greater tax advantages than a traditional IRA when it comes time to begin withdrawals. You can contribute up to $5,500 to an IRA in 2014 ($6,500 if you're age 50 or older), subject to income limitations.

Once you've maxed out your IRA, top off your employer plan. For 2014, you can contribute up to $17,500 ($23,000 if you're age 50 or older). Consider investing any remaining money in a taxable account or a tax-deferred annuity.

Return to top

How can Vanguard help me save for retirement?

Vanguard makes it easy for you to choose and manage your retirement investments. We offer most types of tax-advantaged plans, including 401(k) plans, 403(b)(7) plans, traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE IRAs, and tax-sheltered annuities. A Vanguard IRA® offers a simple way to add to your retirement savings.

You can invest in any combination of Vanguard mutual funds you'd like. Or, if you open a brokerage IRA, you can invest in Vanguard ETFs®, individual securities like stocks and bonds, and mutual funds from other fund companies. And you can monitor your accounts online or by phone whenever you want. No matter which investments you choose, you'll find our fees and costs are among the lowest in the industry.

There are a number of other ways in which Vanguard can help you save.

Return to top

How early should I begin saving for retirement?

The sooner you start, the larger your nest egg is likely to be when you retire. Time magnifies the power of compounding, which can make the same dollar worth significantly more the earlier you invest it. You also benefit from the following incentives:

  • Immediate tax savings. Contributions to employer retirement plans and traditional IRAs can reduce your current federal income taxes.
  • Tax-advantaged growth. You won't pay taxes on your earnings until retirement, when you might be in a lower tax bracket. With a Roth IRA, withdrawals at retirement are completely free from federal taxes—and usually from state and local taxes as well. And you can access the principal at any time without penalty.

Return to top

How will I know if I'll have enough money to retire?

One rule of thumb is that you'll need to replace at least 75% to 85% of your income before retirement. Of course, you may need more or less depending on your lifestyle, your health, and the inevitable effect of inflation.

To calculate how much you may need, try our interactive tool, Determine how much to save. Remember to do a financial checkup every couple of years—or every year as you near retirement—just to be sure you're still on track.

Return to top

All investments are subject to risk, including the possible loss of the money you invest.

When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.

E-mail this page

Send a link Send a link

© 1995–2014  The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, distributor. Your use of this site signifies that you accept our terms & conditions of use.
Security  |  Prospectuses  |  Careers  |  Mobile  |  Feedback