In Focus – SCCCU Blog

Question: I know I should be saving for retirement, but with so many options out there — 401(k)s, IRAs, stocks, bonds — it all feels a little overwhelming. What are the smartest strategies for investing for retirement, especially if I want to make sure I’m setting myself up for a comfortable future?

Answer: When it comes to planning for retirement, one thing is clear: investing wisely is just as important as saving diligently. While there’s no one-size-fits-all approach, the best retirement investing strategies have a few things in common — they're intentional, tax-efficient, and tailored to your personal timeline and goals. Whether you’re decades away from retiring or starting to see it on the horizon, the right strategy can make all the difference in how comfortably — and confidently — you’re able to live down the road.

Strategy #1: Maximize Your Workplace Contributions
One of the best strategies for retirement investing is contributing as much as you can to tax-advantaged accounts, such as employer-sponsored plans like a 401(k). In 2025, individuals under 50 can contribute up to $23,500 annually to their 401(k)s. Those aged 50-59, or 64 and older, can make an additional catch-up contribution of $7,500, and those aged 60–63 can contribute an additional $11,250 in catch-up contributions.

And it’s often not just about what you put in—it’s also about what your employer contributes. Many companies offer a match, typically around $0.50 on the dollar for the first 6% of your salary. That’s free money you don’t want to leave on the table! But not all matches are created equal, and some come with strings attached, such as vesting schedules or minimum service requirements. Before accepting a job — or assuming your current plan is optimal — review the fine print.

Strategy #2: Open Your Own Retirement Account
If your employer doesn’t offer a retirement plan, or if you want to save even more for retirement, then consider an Individual Retirement Account (IRA). There are two main types of IRAs: Traditional and Roth.

1. Traditional IRA: Contributions to a traditional IRA may be tax-deductible (depending on how much you earn), which means they could reduce your taxable income for the year. The money grows tax-deferred, and you’ll pay taxes when you withdraw it in retirement. This is a good option if you expect to be in a lower tax bracket when you retire. Learn more about SCCCU IRAs here.
2. Roth IRA: Contributions to a Roth IRA are made with after-tax dollars, so they don’t reduce your taxable income today. In this case, the money grows tax-free, and withdrawals in retirement are completely tax-free, which can be a huge benefit if you expect to be in a higher tax bracket when you retire. (Just beware of the income limits for Roth IRAs… If you earn more than $165,000 per year, you won’t be eligible to contribute.) Learn more about SCCCU IRAs here.

The contribution limits for both traditional IRAs and Roth IRAs are the same; in 2025, those under age 50 can contribute up to $7,000 into an IRA, and those over 50 can contribute up to $8,000.

Strategy #3: Health Savings Accounts (HSA)
You might not think of a health savings account (HSA) as a retirement tool, but it can be pretty powerful. An HSA, available to people with qualifying high-deductible health plans, offers a unique triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. The money in your HSA is yours for life, and after you turn 65, you can withdraw the money for any reason (not just a medical expense) and you’ll face no tax penalty. (If you use the money at that time for non-medical expenses, you will pay income taxes on any prior growth, just as you would when pulling money from a 401(k).)

In 2025, you can contribute up to $4,300 to an HSA for self-only coverage, or $8,550 for family coverage. If you’re 55 or older, you can make an additional $1,000 catch-up contribution. (Just remember that these limits include any contributions your employer may also make, so keep an eye on your totals!)

Strategy #4: Save Your Raises
Celebrating a raise by upgrading your lifestyle is tempting, but if you’re playing catch-up on retirement, consider redirecting that extra income into your retirement accounts. This not only boosts your savings rate, but it also helps you moderate lifestyle inflation.

Strategy #5: Delay Social Security—If You Can
Social Security is one of the few sources of guaranteed income in retirement. And the longer you wait to claim, the more you typically get. For every year you delay beyond your full retirement age (up to age 70), your benefit generally increases by 8%. Conversely, claiming at age 62 can result in a permanent 30% reduction from your benefits at full retirement age.

Of course, not everyone can afford to wait until age 70, particularly those relying heavily on Social Security for basic living expenses. But if you’re healthy, have a family history of longevity, and can draw from other assets in the meantime, delaying your benefit can pay off substantially in the long run.

Strategy #6: Use the “Bucket Approach”
To help manage market volatility—and avoid panic selling during a market downturn—consider organizing your retirement savings into “buckets.” The idea is simple but powerful: keep a portion of your retirement assets in cash or cash equivalents to cover two years’ worth of living expenses. This cash buffer helps you avoid withdrawing from investments during downturns.

If you plan to follow the “4% rule,” which means you plan to withdraw 4% of your savings annually in retirement, you’d keep around 8% of your total savings in cash, or enough to cover two years’ worth of living expenses. The rest could remain invested in a diversified portfolio tailored to your risk tolerance and timeline. You could keep your cash in a high-yield savings account where you’re still earning interest while maintaining liquidity.

Strategy #7: Run Your Numbers
One reason many people fall short in retirement is simply because they never do the math. Even a rough estimate of your future income and expenses can illuminate gaps and guide your next steps. Start by visiting the Social Security Administration’s website to estimate your benefits. Then add in expected withdrawals from your investments. A common rule of thumb is the 4% rule: if you have $500,000 saved, you could withdraw $20,000 annually in the first year, adjusting for inflation in subsequent years. Combine that with your Social Security benefit, and see how close you are to your desired retirement income. If there’s a shortfall, you’ve still got time to take action and build a stress-free, financially secure retirement.