These 3 Retirement Accounts Can Be Your Hero, Baby

When saving for retirement, one of the best things you can do is go at it from all angles. In other words, utilize all the available retirement accounts and take advantage of the tax breaks that come along with them. As you're planning your retirement, these three accounts can be your heroes.

A 401(k) is the most popular type of retirement plan, mostly because it's offered through employers. With a 401(k), you make pre-tax contributions, lowering your taxable income for the year and putting the money aside for retirement before you can "see" it. When you set your 401(k) plan investments, you'll be given options to choose from, typically your company's stock (if it's a public company), index funds based on market capitalizations, and target-date funds that automatically rebalance as you near retirement.

As of 2022, the most you can contribute to your 401(k) annually is $20,500. You can make a catch-up contribution if you're 50 or older, allowing an extra $6,500. You must be 59 1/2 years old to take penalty-free withdrawals from your 401(k). If you withdraw money before then, you'll face income taxes and a 10% early withdrawal fee.

Source Fool.com