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Growing your retirement savings is a big part of building your net worth. Your net worth is the value of what you own (your assets) minus what you owe (your debts). But it can be challenging to figure out the best place to put your money—and make sure it’s working for you.
There are many ways to maximize your tax-advantaged retirement savings—once you’ve paid off high-interest debt or built your emergency savings. Your options vary based on the offerings in your employer’s retirement plan, your annual income, and your financial goals. We suggest reviewing your options to help you figure out a savings strategy that works best for you. We’ve included some examples to help you make decisions.
Save up to the full employer match
An important part of building your net worth is meeting your match. When you save in your retirement plan, your employer may match your pre-tax and/or Roth after-tax contributions. Matching contributions are added to your account in addition to your own contributions. That way, your account grows even faster.
The match may be a percentage of your contributions, a percentage of your salary, or even a specific dollar amount. If your employer offers matching contributions, make it a priority to contribute enough to get the max. Since matching contributions are essentially free money, they’re too good to pass up.
Try to spread your contributions evenly throughout the year—and get the full match with each paycheck. Why? You could be missing out on some company contributions otherwise.
For example: Let’s say that your company matches $1 for every $1 you contribute from each paycheck, up to 4% of your pay. You decide to contribute 6% the first half of the year. But for the rest of the year you only contribute 2%. That way, you’d be missing out on some matching money for the second part of the year. But if you saved 4% consistently, you’d be getting the full match the whole time.
Some employers offer something called a “true-up contribution” to make up for scenarios like this. Made after the close of each plan year, a true-up gives you the matching money you might have missed otherwise. Check your plan rules to see if your retirement plan offers a true-up and for details on how it works.
Save in an HSA
If your employer offers a high-deductible health plan (HDHP) that you’re already enrolled in, a health savings account (HSA) is a good option for increasing your net worth. In 2025, individuals can save up to $4,300 in their HSA, and the maximum family contribution is $8,550. Anyone age 55 or older can also save an extra $1,000 in their HSA each year.
HSAs offer a potential triple tax advantage because your contributions are pre-tax, so your money grows in the account tax-free, and you won’t pay taxes on money used for qualified medical expenses. And while HSAs are designed for medical expenses, you can use these savings for anything once you’ve reached age 65.1
Your balance carries over from year to year—which means you won’t lose what you don’t use. Once your account balance reaches a certain level (set by your employer or HSA custodian), you can invest the money. And if your employer doesn’t offer an HSA, you can open one on your own—as long as you’re covered by an HDHP.
Increase your pre-tax or Roth contributions in your retirement plan
To increase your net worth—and build savings outside of your retirement plan—you may want to consider your IRA options. Both Roth and traditional IRAs may offer additional flexibility and investment choices.
Asking yourself these questions can help you decide between saving more in your retirement plan or contributing to a Roth IRA:
- Am I looking for more flexibility in choosing investments and the possibility of withdrawing the money early? If your answer is yes and you are eligible to save in a Roth IRA, you might want to consider one before contributing more to your retirement plan.
- Do I earn too much to qualify for a Roth IRA? If you can answer yes to this question, contributing more to your retirement plan now might make sense.
Did you know that in 2025 you can save up to $23,500 in your retirement plan on a pre-tax or Roth basis? And you may be eligible to make catch-up contributions if you’re age 50 or older. If you’re ages 60 to 63 and your plan allows, you may have an even higher catch-up contribution limit.
Think about how much you can save and then increase your contributions a little bit each year if you’re able. Even increasing them by just 1 or 2 percentage points annually can make a big difference over time.
The difference between pre-tax and Roth contributions
With pre-tax contributions, the money comes out of your paycheck before it’s taxed—which means you pay less in taxes today. But you’ll owe income taxes on your contributions and any earnings when you withdraw them later.2
With Roth contributions, you pay taxes today, but potentially never again. That’s because you can withdraw your contributions tax-free—plus any earnings—as long as you2:
- Are at least age 59½ when you make the withdrawal.
- Made your first Roth contribution at least 5 years earlier.
Whether you can make pre-tax or Roth contributions—or a combination of both—depends on your plan rules. You just have to stay at or under the annual IRS contribution limit.
Save up to the max with after-tax contributions
In 2025, the maximum employer and employee contributions is $70,000—or $77,500 if you’re age 50 or older. Traditional after-tax contributions can help you build your net worth because they’re made with money that’s already been taxed. When you withdraw after-tax contributions, you’ll only pay taxes on the earnings. And because you can contribute more on an after-tax basis, these contributions can quickly increase your retirement savings.
If your retirement plan allows, you may also be able to convert traditional after-tax contributions to Roth contributions—a process known as mega backdoor Roth. When you convert after-tax contributions to Roth, you can take them out tax-free, as long as you meet certain conditions.3 If your retirement plan allows, you may even be able to roll over your after-tax contributions to a Roth IRA later.
Having more Roth money could help lower the taxes you pay in retirement. Just remember that everyone’s situation is different, so contact a tax advisor to find out what’s right for you. Also keep in mind that a Roth conversion can’t be undone, and you won’t receive any matching contributions from your employer for completing one. And you can’t undo a Roth conversion.
Explore your IRA options
To increase your net worth—and to build savings outside of your employer retirement plan—you might want to consider an IRA.
IRAs may offer additional flexibility and investment choices beyond an employer retirement plan. Your personal situation and goals will help you determine if an IRA makes sense for you. Since you may have a couple of choices here—traditional or Roth—you’ll want to think about your age, income, and tax bracket.
Here’s a quick breakdown of Roth and traditional IRAs:
Roth IRAs
You may want to consider one if:
- Your income allows you to contribute to one. See income limits
- You want tax-free growth.
- You want tax-free income in retirement.4
Traditional IRAs
You may want to consider one if:
- You’re eligible for a tax deduction on your contribution. See deduction info
- You aren’t eligible for a Roth IRA but still want to save more for retirement with tax-deferred growth.
- You aren't eligible for a tax deduction but want to contribute to a traditional IRA and then do a Roth conversion in your IRA. This is also known as a backdoor Roth IRA.
There are other important factors too—so you’ll want to take those into account before you decide.
See a side-by-side comparison of Roth and traditional IRAs
Remember, though, that there are limits on how much you can contribute to an IRA each year. For 2025, it’s $7,000—or $8,000 if you’re age 50 or older.
Finding a savings strategy
Example 1: John
Your strategy will depend on your financial situation and goals. For example, let’s look at 3 people who are considering which approach they take for increasing their tax-advantaged savings
John wants as much tax-free income in retirement as possible, but he also wants to put money away for his child’s education.
- High earner ($140,000 a year).
- Contributes enough to receive company match.
- Enrolled in an HSA.
- Wants to build his emergency savings while also saving for retirement.
- 401(k) plan doesn’t offer traditional after-tax contributions.
- Wants to save for his child’s education.
Additional considerations: After reaching these goals, John will consider saving to a 529 plan for his child’s education.
Example 2: Jackie
Jackie wants as much tax-free income in retirement as possible, but she also wants to save toward short-term goals.
- High earner ($300,000 a year).
- Contributes enough to receive company match.
- Doesn’t have an HSA.
- 401(k) plan offers traditional after-tax contributions.
- Wants to save for a new home.
Additional considerations: Jackie will consider converting some of her traditional after-tax savings to Roth (backdoor conversions), since it would work well with her investment objectives. After saving for her retirement goals, Jackie will think about investing in a taxable brokerage account to help her save for a down payment on a new home.
Example 3: Jamie
Jamie wants to reduce their taxable income this year, while increasing their emergency savings.
- Moderate earner ($75,000 a year).
- Contributes enough to receive company match.
- Enrolled in an HSA.
- 401(k) plan doesn’t offer traditional after-tax contributions.
- Wants to build emergency savings.
Additional considerations:
Jamie wants to save even more money for unexpected costs. They decide to save $50 each month for this extra goal. While saving more for emergencies, they also decide to follow the above approach.
These are examples only.
We’re here to help!
Deciding where to put your next dollar can be overwhelming. That’s why we offer educational resources to help you choose what works best for your personal situation.
We also offer advice and money management services that can help you plan for—and achieve—your financial goals. And don’t forget that, though increasing your net worth takes time, every decision you make along the way gets you closer to your goal.
1Taxes: You can only use your HSA for medical costs that are covered. Otherwise, you may have to pay income tax on the money you take out. And if you’re under age 65, you may also face a 20% federal penalty tax.
2Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10% federal penalty tax if you take money out early.
3Taxes: When you convert pre-tax money to Roth, you’ll owe taxes on the whole amount. When you convert traditional after-tax money, you’ll owe taxes on just the earnings. You should talk with a tax advisor before you do this. Later, when you take the Roth money out, you won’t owe taxes as long as you meet two conditions. First, you’re at least age 59½. Second, you converted the money at least five years earlier. If you take the money out early, you may have to pay income tax and a 10% federal penalty tax. If required by law, Vanguard will withhold some taxes for you.
4Withdrawals from a Roth IRA are tax-free if you are over age 59½ and have held the account for at least five years; withdrawals of earnings taken prior to age 59½ or five years may be subject to ordinary income tax or a 10% federal penalty tax, or both.
Advice is provided by Vanguard Advisers, Inc. (VAI), a federally registered investment advisor. Eligibility restrictions may apply. VAI cannot guarantee a profit or prevent a loss.
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Vanguard does not provide individual tax advice. You should discuss your situation with your tax advisor.
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