Ways to save for retirement beyond your 401(k)

If you’re enrolled in a high‑deductible health plan, you may be eligible to contribute to an HSA. HSAs offer a rare triple tax advantage:

• Contributions are tax‑deductible up to the IRS limit.
• Contributions and earnings are invested and can grow tax‑free.
• Withdrawals for qualified medical expenses are tax‑free.

What many people don’t realize is that HSAs can also be used as a long‑term retirement resource. Say, for example, that you have funds that carry over and grow from year to year in your HSA. While you can use an HSA to pay for qualified medical costs, after age 65, you may use withdrawals for non‑medical expenses (though they may be taxable).

If your employer offers an HSA account, you can generally sign up during the benefits enrollment period. In 2026, HSA contribution limits are up to $4,400 for self-only coverage and up to $8,750 for family coverage. If you’re 55 and older, you can save an additional $1,000 in an HSA as a catch-up contribution.

IRAs provide another layer of tax‑advantaged savings outside of workplace plans like 401(k)s. Unlike a 401(k), you set up an IRA on your own and contribute to it as you’re able.

There are two common types of IRAs. A traditional IRA offers tax‑deferred growth; you pay taxes when you withdraw the funds in retirement. A Roth IRA, funded with after‑tax dollars, allows for both tax‑free growth and withdrawals in retirement.

There are income limit restrictions for Roth IRAs and deduction limits for traditional IRAs. Knowing these rules can help you decide whether you’re eligible for the full contribution and deduction amounts.

The answer—traditional IRA or Roth IRA—comes down to whether your current tax bracket today is higher or lower than what you expect your tax bracket to be in retirement. If your current tax bracket is higher today, a traditional IRA may be a better option. It allows you to deduct contributions now and, when you withdraw them in retirement, ideally be taxed for those then at a lower tax bracket. If your current tax bracket is lower today, a Roth IRA may be the better choice. You’ll pay taxes now but enjoy tax-free withdrawals in retirement. If you’re not sure whether your retirement tax bracket will be higher or lower than your current one, you may want to split contributions 50/50: 50% of your total yearly IRA contributions in a traditional IRA, and 50% in a Roth IRA. (In 2026, you may contribute up to $7,500 to an IRA if you’re under age 50. For those 50 or older, you may contribute up to $8,600.)

Principal^® offers Roth IRA and traditional IRA options to help you create a diverse retirement savings foundation. Get started today and set up the IRA option that’s best for you.

A taxable brokerage account is another way to build up diverse retirement savings. Even though savings in a brokerage account is not tax-advantaged like a workplace plan, HSAs, or IRAs, they do offer flexibility of a different sort. That includes:

• No contribution limits or income limits
• Full access to your savings at any time, with no early withdrawal penalties
• No required minimum distributions (RMDs)
• Broad investment flexibility

Note that contributions to a brokerage account are made with after-tax dollars and are not tax-deductible. Income tax is also due when assets in a brokerage account are sold for a profit, earn interest, or receive dividends.