Category: Personal Finance

If you work for yourself, a Solo 401(k) is one of the most powerful retirement accounts available to you. It lets you contribute as both the employee and the employer, which means you can sock away far more than you could with a SEP IRA or a standard IRA. Here’s everything you need to know.

What Is a Solo 401(k)?

A Solo 401(k) — also called an Individual 401(k), a One-Participant 401(k), or a Self-Employed 401(k) — is a retirement plan designed for self-employed individuals who have no full-time employees other than themselves and their spouse. It follows the same rules as a standard workplace 401(k) but is set up for sole proprietors, freelancers, independent contractors, and single-member LLCs.

Who Qualifies for a Solo 401(k)?

You qualify if you:

• Are self-employed with net business income
• Have no full-time W-2 employees (your spouse is an exception)
• Operate as a sole proprietor, LLC, partnership, or S-corp

If you have employees who work 1,000 or more hours per year, you’d need to offer them coverage too — which often means switching to a traditional 401(k) plan.

Solo 401(k) Contribution Limits for 2026

This is where the Solo 401(k) really shines. You can contribute in two capacities:

• As the employee: Up to $23,500 in elective deferrals (or $31,000 if you’re 50 or older, thanks to catch-up contributions)
• As the employer: Up to 25% of your net self-employment income

The total combined limit is $70,000 in 2026 ($77,500 with catch-up). That’s a significant advantage over a SEP IRA, which only allows employer contributions of up to 25% of compensation.

For example, if your net self-employment income is $100,000, you could contribute $23,500 as the employee plus $25,000 as the employer — a total of $48,500 in a single year.

Roth vs. Traditional Solo 401(k)

Many Solo 401(k) providers offer both traditional and Roth options:

• Traditional: Contributions are pre-tax, reducing your taxable income now. You pay taxes on withdrawals in retirement.
• Roth: Contributions are after-tax. Qualified withdrawals in retirement are completely tax-free.

If you expect to be in a higher tax bracket in retirement, or you’re younger with decades of compounding ahead, the Roth Solo 401(k) can be a powerful choice. If you need the tax break today, traditional is the better call.

Solo 401(k) vs. SEP IRA

At lower income levels, the Solo 401(k) typically allows larger contributions because you can add employee deferrals on top of employer contributions. A SEP IRA only allows employer-side contributions.

How to Open a Solo 401(k)

1. Choose a provider. Fidelity, Vanguard, Charles Schwab, and E*TRADE all offer free Solo 401(k) plans with low-cost index funds. Fidelity and Schwab currently have no annual fees.
2. Get an EIN. Even as a sole proprietor, you’ll need an Employer Identification Number from the IRS (free, takes minutes at IRS.gov).
3. Complete the plan documents. Your brokerage will walk you through the adoption agreement.
4. Start contributing. You can make employee deferrals any time during the tax year. Employer contributions must be made by the tax filing deadline (plus extensions).

Important deadline: The plan itself must be established by December 31 of the tax year for which you want to make contributions. Don’t wait until April.

Can You Take a Loan From a Solo 401(k)?

Yes — unlike an IRA, a Solo 401(k) can allow loans of up to 50% of your vested balance or $50,000, whichever is less. Not all providers support this feature, so check before you open an account if the loan option matters to you.

What Are the Tax Advantages?

• Traditional contributions reduce your current taxable income, which directly lowers your self-employment tax as well
• Roth contributions grow tax-free and are withdrawn tax-free in retirement
• Employer contributions are deductible as a business expense

Is a Solo 401(k) Right for You?

A Solo 401(k) is one of the best retirement accounts available if:

• You’re self-employed with no full-time employees
• You want to maximize contributions, especially at moderate income levels
• You want a Roth option
• You might need a loan from the plan one day

If you have employees, a SEP IRA or SIMPLE IRA may be simpler. But for solo operators who want to build serious retirement wealth, the Solo 401(k) is hard to beat.

Bottom Line

A Solo 401(k) lets self-employed workers contribute as both the employee and employer, with a combined limit of up to $70,000 in 2026. It offers more flexibility than a SEP IRA, includes a Roth option, and allows loans. Open one before December 31 of the year you want to start contributing.

Property taxes are one of the largest recurring costs of homeownership, yet many homeowners pay more than they legally owe. Assessment errors, unclaimed exemptions, and a reluctance to challenge assessments mean that billions of dollars in overpayments flow to local governments every year. Knowing how to review your assessment, claim available exemptions, and file an appeal can put real money back in your pocket without a lawyer or a complicated process.

How Property Taxes Work

Property taxes are calculated by multiplying your home’s assessed value by the local tax rate (the mill levy). If your home is assessed at $400,000 and the local rate is 1.2%, you owe $4,800 per year. Most jurisdictions reassess properties periodically — often every one to three years — or when the property changes hands.

The key insight is that the assessed value is an estimate, and estimates are frequently wrong. Studies by the University of Chicago and others have found that between 30% and 60% of residential properties are over-assessed in some jurisdictions. Even if your assessment is correct, you may be entitled to exemptions that reduce your taxable base.

Step 1: Review Your Assessment Notice

When you receive your property tax assessment, do not ignore it. Check the assessed value against recent sale prices of comparable homes in your neighborhood. Real estate sites like Zillow, Redfin, and your county assessor’s website show recent comparable sales. If your assessed value is significantly higher than what similar homes have recently sold for, you have grounds for an appeal.

Also review the property characteristics on your assessment: square footage, number of bathrooms and bedrooms, lot size, and any improvements recorded. Errors in these records are common and can inflate your assessment.

Step 2: Claim All Available Exemptions

Most states and counties offer property tax exemptions that can meaningfully reduce your tax bill. Common exemptions include:

• Homestead exemption. Reduces assessed value for owner-occupied primary residences. Available in most states, typically $25,000 to $50,000 in reduction. Often must be applied for — it is not automatic.
• Senior citizen exemption. Additional reductions for homeowners above a certain age (typically 65+), sometimes with income limits.
• Veteran exemption. Reductions for active military members and veterans, with enhanced benefits for disabled veterans in many states.
• Disability exemption. For homeowners with qualifying disabilities.
• Income-based freeze. Some states freeze the assessed value for seniors or low-income homeowners so it cannot rise beyond a set point.

Visit your county assessor’s website or call their office to see which exemptions apply in your jurisdiction and whether you have claimed all of them. Many homeowners leave these on the table simply because they never applied.

Step 3: File an Appeal

If your assessment appears too high after reviewing comparables and claiming exemptions, file a formal appeal. The process varies by jurisdiction but generally follows this pattern:

Know the Deadline

Appeal deadlines are strict and short — typically 30 to 90 days after your assessment notice is mailed. Missing the deadline forfeits your right to appeal for that assessment period.

Gather Evidence

Your strongest evidence is a list of three to five comparable recent sales (sold within the last six to twelve months, within a half-mile radius, similar size and features) that support a lower value. You can also hire an independent appraiser, though this typically only makes sense for high-value properties where the tax savings justify the cost.

File the Appeal

Most counties have an online appeal form or a form you can download and mail. Present your comparables clearly. Appeals are often reviewed informally first — many are resolved in your favor without a formal hearing.

Attend the Hearing if Needed

If your initial appeal is not resolved informally, you will typically be scheduled for a hearing before a local board of review or tax tribunal. Arrive with printed comparables, photos if relevant, and a concise argument. You do not need an attorney. Most hearings are brief and informal.

How Much Can You Save?

Successful appeals typically reduce assessed values by 10% to 30%, depending on the original error. On a $400,000 assessed value with a 1.2% tax rate, a 15% reduction saves $720 per year — and that savings repeats every year until the next reassessment.

The Bottom Line

Lowering your property taxes requires two actions: claiming every exemption you qualify for, and appealing your assessment if comparables support a lower value. Both are processes you can complete yourself at no cost. Given that the savings repeat annually, even a modest appeal victory pays off quickly and permanently until your next reassessment.

For other strategies that reduce the cost of homeownership, see our guide to what PMI is and how to avoid it. For understanding your home’s equity options, see what a home equity loan is.

Estate planning is one of the most deferred financial tasks in America. A 2024 survey by Caring.com found that fewer than 35% of American adults have a valid will. For most people, the question is not whether to plan their estate but which tool — a will, a trust, or both — is appropriate for their situation. Getting this wrong can leave your family in an expensive, public, and time-consuming process after you die.

What Is a Will?

A last will and testament is a legal document that expresses your wishes for how your assets should be distributed after your death. It names beneficiaries for your property, names a guardian for minor children, and designates an executor (the person who carries out the will’s instructions). A will becomes effective only at death and must go through probate — the court-supervised process of validating the will and distributing assets.

Wills are public record once they enter probate. They can be contested by heirs, and probate can take months to years depending on the estate’s complexity and jurisdiction. Despite these limitations, a will is better than no plan, and for simple estates, it is often sufficient.

What Is a Trust?

A trust is a legal entity that holds assets on behalf of beneficiaries. A revocable living trust — the most common type used in personal estate planning — is created during your lifetime, funded by transferring ownership of your assets into the trust, and managed by you (as trustee) until your death or incapacity, at which point a successor trustee takes over and distributes assets per your instructions.

The key advantage of a revocable living trust is that it avoids probate entirely. Assets held in the trust transfer directly to beneficiaries without court involvement, often within weeks rather than months or years. Trusts are also private — unlike a will, a trust document does not become public record.

Key Differences at a Glance

• Probate: Wills require probate. Trusts avoid it.
• Privacy: Wills are public record. Trusts are private.
• Speed: Wills can take 6 to 18 months to settle. Trusts typically settle in weeks.
• Cost to settle: Probate can cost 3% to 7% of the estate’s value in attorney and court fees. Trusts typically cost less at settlement.
• Cost to create: A simple will costs $100 to $500. A revocable living trust typically costs $1,500 to $3,000 through an attorney, or $300 to $700 through online services.
• Incapacity planning: Trusts manage assets seamlessly if you become incapacitated. Wills only take effect at death — incapacity requires a separate power of attorney.
• Asset funding: Trusts must be funded — you must retitle assets into the trust’s name. This is often overlooked and a major failure point.

Do You Need Both?

Yes, in most cases. Even with a trust, you need what is called a “pour-over will” — a simple will that catches any assets you forgot to fund into the trust and directs them into it at death. The pour-over will still goes through probate for unfunded assets, but the trust covers the bulk of your estate.

When a Will Alone May Be Enough

A will is typically sufficient if your estate is small and simple, you live in a state with simplified or small estate probate procedures, your assets have named beneficiaries (like IRAs, 401(k)s, and life insurance — which pass outside of probate regardless), and you are not concerned about privacy.

When a Trust Makes Sense

A trust is worth the additional cost and complexity if your estate is large or complex, you own real estate in multiple states (each state requires a separate probate), you want to control how and when beneficiaries receive assets (particularly for minors or financially irresponsible heirs), you have privacy concerns, or you want to avoid probate to protect your family from a lengthy, costly process.

Other Documents You Need Regardless

A complete estate plan includes:

• Durable power of attorney — authorizes someone to handle financial matters if you become incapacitated
• Healthcare proxy / medical power of attorney — designates someone to make medical decisions on your behalf
• Living will / advance directive — documents your wishes for end-of-life medical care

The Bottom Line

For most families, a revocable living trust combined with a pour-over will, durable power of attorney, and healthcare directive represents the most complete estate plan. A will alone is a reasonable starting point for young adults with simple finances. Either way, having a plan is dramatically better than having none — and the cost of creating one is trivial compared to the cost of dying without one.

For context on how estate planning intersects with retirement accounts, see our guide to what a traditional IRA is. For another estate planning tool used by higher-net-worth families, see what a living trust is.

See also:

• What Is a Beneficiary? How to Choose and Update Yours in 2026

Credit card debt is expensive, but it is also negotiable. Card issuers, collectors, and debt settlement companies all have processes for working with consumers who cannot pay in full. Understanding those processes gives you real leverage. Whether you are behind on payments, drowning in interest charges, or dealing with a debt in collections, there are specific steps you can take to reduce what you owe or make repayment more manageable.

What You Can Negotiate

Most people do not realize that credit card debt is negotiable at multiple stages:

• Interest rate reduction. You can call your card issuer and ask for a lower rate. This is most effective if you have a good payment history or a competing offer.
• Hardship plan. If you are struggling but still current, issuers often have undisclosed hardship programs that temporarily reduce your interest rate or minimum payment.
• Waived fees. Late fees and over-limit fees are routinely waived for customers who call and ask, especially first-time occurrences.
• Settlement for less than the full balance. If the debt is in collections or significantly delinquent, issuers will sometimes accept a lump sum less than the full balance to close the account.

Step 1: Know Where You Stand

Before calling anyone, review all your accounts. Know the balance, interest rate, minimum payment, and how many payments you have missed on each card. Understanding your full picture helps you prioritize and negotiate more effectively.

Step 2: Call the Issuer Directly

Call the number on the back of your card and ask to speak with the hardship or retention department. Be direct: explain that you are experiencing financial hardship and ask what options are available. Specifically ask about:

• A temporary interest rate reduction
• A hardship repayment plan with reduced minimum payments
• Waiver of any pending late or annual fees

Representatives have more authority than most callers realize. Keep records of every call: the date, the rep’s name, and what was agreed.

Step 3: Use Competing Offers as Leverage

If you have received a balance transfer offer from another issuer, mention it during your call. Issuers prefer to retain customers rather than lose the balance entirely. A competing 0% balance transfer offer is often enough to prompt a rate reduction.

Step 4: Consider a Debt Management Plan

Nonprofit credit counseling agencies like the National Foundation for Credit Counseling (NFCC) offer Debt Management Plans (DMPs). Under a DMP, the agency negotiates reduced interest rates with your creditors — often to 0% to 6% — and you make one consolidated monthly payment to the agency, which distributes it to your creditors. There is typically a small monthly fee ($25 to $50), but the interest savings can be substantial. Your accounts are generally closed under a DMP, which affects your credit temporarily.

Step 5: Negotiate a Settlement (for Delinquent Debt)

If you are significantly behind — typically 90 or more days delinquent — the issuer or a debt collector may accept a settlement of 40% to 60% of the balance to close the account. To negotiate a settlement:

• Get any settlement offer in writing before you pay
• Confirm the agreement closes the account and that no remaining balance will be reported or sold
• Understand that a settled account appears on your credit report as “settled for less than full amount” and remains for seven years
• Know that forgiven debt above $600 may be reported on a 1099-C as taxable income, unless you are insolvent at the time of settlement

What Debt Settlement Companies Will Not Tell You

For-profit debt settlement companies often charge 15% to 25% of the enrolled debt as fees, instruct you to stop paying creditors (damaging your credit), and make no guarantees of the outcome. You can negotiate directly with creditors yourself for free. If you need help, use a nonprofit credit counseling agency instead.

The Bottom Line

Credit card debt negotiation is not a last resort — it is a standard tool available at every stage of delinquency. Start with a direct call to your issuer, understand your options, and get all agreements in writing. Avoiding the problem always makes it worse. Taking action, even late, almost always produces a better outcome than doing nothing.

For strategies to eliminate credit card debt systematically, see our guide to how to get out of debt fast. If errors from past debt are affecting your credit, see how to dispute a credit report error.

Student loan debt can feel like a weight you carry for decades. But with the right strategy, you can pay it off faster than the standard 10-year plan and save thousands of dollars in interest. This guide covers the most effective approaches to tackling student loan debt in 2026.

Know What You Owe

Before you can make a payoff plan, you need a clear picture of your loans. Log in to your loan servicer’s website and note:

• Total balance for each loan
• Interest rate on each loan
• Loan type (federal or private)
• Monthly payment amount
• Payoff date under the current plan

For federal loans, visit studentaid.gov for a complete picture. For private loans, check directly with your lender.

Choose the Right Payoff Strategy

The Avalanche Method (Best for Saving Money)

Pay minimums on all loans and put every extra dollar toward the loan with the highest interest rate. Once that loan is paid off, roll its payment to the next highest-rate loan. This method minimizes the total interest you pay over time and is mathematically the best approach.

The Snowball Method (Best for Motivation)

Pay minimums on all loans and put every extra dollar toward the loan with the smallest balance. Once that loan is gone, roll its payment to the next smallest balance. This method builds momentum through quick wins and can be more motivating for people who struggle to stay on track.

Make More Than the Minimum Payment

Even small additional payments make a significant difference over time. If you have a $30,000 loan at 6.5% interest on a 10-year repayment plan, your monthly payment is about $340. Adding just $100 per month reduces your payoff time by about two years and saves over $2,000 in interest.

When you make extra payments, contact your servicer and specify that the extra amount should be applied to the principal, not to future payments. Some servicers will credit extra payments as an advance on your next bill, which does not reduce your balance as effectively.

Refinance to a Lower Interest Rate

If you have private student loans or federal loans you are certain you do not need income-driven repayment or forgiveness programs, refinancing may significantly reduce your interest rate. Private lenders like SoFi, Earnest, and ELFI offer competitive rates for borrowers with good credit and stable income.

Important warning: refinancing federal loans into a private loan permanently removes access to federal protections like income-driven repayment plans, Public Service Loan Forgiveness, and deferment during hardship. Do not refinance federal loans unless you are certain you will not need these programs.

Federal Repayment Plan Options

If you have federal loans and are struggling with monthly payments, income-driven repayment (IDR) plans cap your monthly payment at a percentage of your discretionary income. Under the SAVE plan, some borrowers with small balances can see loan forgiveness after a shorter repayment period.

Public Service Loan Forgiveness (PSLF) forgives the remaining balance on federal loans after 10 years of qualifying payments while working for a qualifying government or nonprofit employer.

Use Windfalls to Pay Down Debt

Tax refunds, work bonuses, monetary gifts, and other windfalls are opportunities to make large lump-sum payments. A $2,000 tax refund applied to a loan balance can cut months off your payoff timeline. Before spending a windfall, consider dedicating at least half to your loan principal.

Avoid These Common Mistakes

• Making minimum payments and not prioritizing extra payments
• Refinancing federal loans without understanding what you are giving up
• Enrolling in forbearance when you can afford to pay, letting interest pile up
• Not applying extra payments to the principal
• Ignoring income-driven repayment options if you qualify for forgiveness

Side Income Can Accelerate Your Payoff

Dedicating side income to student loan payments is one of the most effective ways to pay them off faster. Freelancing, a part-time job, selling items, or renting out a room can generate hundreds of extra dollars per month. Even an extra $200 per month can cut years off your repayment timeline.

Employer Student Loan Benefits

Some employers offer student loan repayment assistance as a workplace benefit. Under current law, employers can contribute up to $5,250 per year toward an employee’s student loans tax-free. If your employer offers this benefit, take full advantage of it.

The Bottom Line

Paying off student loans faster is about two things: putting more money toward your debt and choosing the right strategy. Start by knowing exactly what you owe and the interest rate on each loan. Make extra payments when you can. Refinance only if it makes sense for your situation. And use every windfall as an opportunity to chip away at the balance.

Exchange-traded funds, or ETFs, are one of the best investment vehicles available for both beginners and experienced investors. They offer broad diversification, low costs, and flexibility. This guide covers everything you need to know to start investing in ETFs in 2026.

What Is an ETF?

An ETF is a collection of securities, like stocks or bonds, that trades on a stock exchange just like a single stock. Most ETFs track an index, such as the S&P 500, and hold all or most of the stocks in that index in proportion to their market weight. When you buy one share of an ETF, you get exposure to all the securities inside it.

For example, buying one share of a S&P 500 ETF gives you a tiny piece of ownership in 500 of the largest US companies, including Apple, Microsoft, Amazon, and hundreds more.

Why ETFs Are Popular

Diversification

A single ETF can hold hundreds or thousands of stocks. This instantly reduces your risk compared to owning individual stocks, because if one company performs poorly, it is just a small fraction of your total investment.

Low Costs

Most broad index ETFs have expense ratios (annual fees) of 0.03% to 0.20%, far lower than actively managed mutual funds that often charge 0.50% to 1.00% or more. Over decades, this difference compounds into tens of thousands of dollars.

Tax Efficiency

ETFs are structured in a way that typically generates fewer taxable events than mutual funds. This makes them particularly well-suited for taxable brokerage accounts.

Flexibility

ETFs trade throughout the day like stocks, so you can buy or sell at any price during market hours. Mutual funds only price once per day after the market closes.

Types of ETFs

Broad Market ETFs

These track the entire US stock market or a major index like the S&P 500. Examples include VTI (Vanguard Total Stock Market ETF) and SPY (SPDR S&P 500 ETF). These are the core of most long-term investment portfolios.

International ETFs

Provide exposure to stocks outside the US. VXUS (Vanguard Total International Stock ETF) and EFA (iShares MSCI EAFE ETF) are common choices for international diversification.

Bond ETFs

Track bond indexes and provide more stability than stock ETFs. BND (Vanguard Total Bond Market ETF) and AGG (iShares Core US Aggregate Bond ETF) are popular choices.

Sector ETFs

Focus on specific industries like technology, healthcare, or energy. These can be used to tilt a portfolio toward sectors you believe will outperform.

How to Buy ETFs

Step 1: Open a Brokerage Account

You need a brokerage account to buy ETFs. For retirement savings, open a Roth IRA or traditional IRA. For general investing, open a taxable brokerage account. Major brokerages like Fidelity, Vanguard, and Schwab offer commission-free ETF trading and no account minimums.

Step 2: Fund Your Account

Link your bank account and transfer money to your brokerage account. The transfer typically takes one to three business days.

Step 3: Research and Choose ETFs

For most long-term investors, a simple three-fund portfolio works well:

• A US total stock market ETF (like VTI)
• An international stock ETF (like VXUS)
• A bond ETF (like BND)

Adjust the proportions based on your age and risk tolerance.

Step 4: Place Your Order

Search for the ETF by its ticker symbol. You can buy as little as one share, or fractional shares at many brokerages. Use a market order to buy at the current price or a limit order to specify the maximum price you are willing to pay.

How Much Do You Need to Start?

Many ETFs have share prices between $50 and $500. With fractional shares at brokerages like Fidelity and Schwab, you can start with as little as $1. There are no account minimums at most major brokerages.

Common ETF Investing Mistakes

• Buying too many ETFs with overlapping holdings
• Chasing recent performance and buying sector ETFs after big runups
• Paying high expense ratios when cheaper alternatives exist
• Selling during market downturns instead of staying invested
• Trading frequently instead of holding for the long term

The Bottom Line

ETFs make diversified, low-cost investing accessible to everyone. A simple portfolio of two or three broad index ETFs, held consistently over many years, has historically outperformed the majority of actively managed funds. Start with a small amount, keep costs low, and stay the course through market ups and downs.

A traditional IRA is one of the most powerful tools available for saving for retirement. It lets you invest money now, defer taxes on your earnings, and potentially deduct your contributions from your taxable income. But it is not the right fit for everyone. This guide breaks down how a traditional IRA works, who benefits most from it, and what to watch out for.

What Is a Traditional IRA?

A traditional IRA (Individual Retirement Account) is a tax-advantaged savings account you open on your own through a bank, brokerage, or financial institution. Unlike a 401(k), it is not tied to an employer. You contribute money, invest it in stocks, bonds, mutual funds, or other assets, and the growth is tax-deferred until you withdraw it in retirement.

How Does a Traditional IRA Work?

You contribute money to the account during your working years. Your contributions may be tax-deductible depending on your income and whether you or your spouse have access to a workplace retirement plan. The money grows tax-deferred, meaning you do not pay taxes on dividends, interest, or capital gains each year. When you take withdrawals in retirement, you pay ordinary income tax on the money.

Contribution Limits for 2026

For 2026, you can contribute up to $7,000 per year to a traditional IRA. If you are 50 or older, you can add a catch-up contribution of $1,000, bringing the total to $8,000. These limits apply across all your IRAs combined, not per account.

Tax Deductibility Rules

Whether your contribution is tax-deductible depends on two things: your income and whether you or your spouse participates in a workplace retirement plan like a 401(k).

• If neither you nor your spouse has a workplace retirement plan, your contribution is fully deductible at any income level.
• If you have a workplace plan, the deduction phases out at higher incomes.
• For 2026, the deduction phases out between $77,000 and $87,000 for single filers and between $123,000 and $143,000 for married couples filing jointly (when the contributing spouse has a workplace plan).

When Can You Take Money Out?

You can take withdrawals from a traditional IRA at any time, but there are penalties for early withdrawals. If you take money out before age 59.5, you owe a 10% penalty on top of ordinary income taxes. There are exceptions for certain situations including first-time home purchase (up to $10,000 lifetime), qualified education expenses, disability, and substantial medical expenses.

Required Minimum Distributions

Starting at age 73, you must begin taking required minimum distributions (RMDs) each year. The IRS calculates the minimum amount you must withdraw based on your account balance and life expectancy. Failing to take RMDs results in a 25% penalty on the amount you should have withdrawn.

Traditional IRA vs. Roth IRA

The key difference is when you pay taxes. With a traditional IRA, you may get a tax deduction now and pay taxes when you withdraw the money in retirement. With a Roth IRA, you contribute after-tax dollars and withdrawals in retirement are tax-free.

A traditional IRA generally makes more sense if you expect to be in a lower tax bracket in retirement than you are now. If you expect your tax rate to be higher in retirement, a Roth IRA is often the better choice.

Who Should Open a Traditional IRA?

A traditional IRA is a good fit for people who:

• Want to reduce their taxable income this year
• Expect to be in a lower tax bracket in retirement
• Have already maxed out their employer 401(k) and want to save more
• Are self-employed with no access to a workplace retirement plan
• Are in their peak earning years and want to defer taxes

How to Open a Traditional IRA

Opening a traditional IRA takes about 15 minutes at most major brokerages. You will need your Social Security number, bank account information for funding the account, and your employer information. Choose a provider that offers low-cost index funds and no account fees. Popular options include Fidelity, Vanguard, and Charles Schwab.

Once the account is open, select your investments. Most financial advisors recommend low-cost index funds for long-term retirement savings. Set up automatic contributions to stay consistent.

Common Mistakes to Avoid

One of the most common mistakes is contributing more than the annual limit. Excess contributions are subject to a 6% penalty tax for each year the excess stays in the account. Another mistake is failing to take RMDs once you reach age 73. And many people forget to name a beneficiary on the account, which can cause complications for heirs.

The Bottom Line

A traditional IRA is a flexible, powerful retirement savings account that can reduce your tax bill today and give your money decades to grow. If you have earned income and are not saving enough for retirement, a traditional IRA should be one of your first moves. Start with even a small monthly contribution and increase it over time as your income grows.

An employer 401(k) match is the closest thing to free money that most employees will ever encounter. If you are not contributing enough to capture your full match, you are leaving guaranteed compensation on the table every pay period.

What Is a 401(k) Employer Match?

When your employer offers a match, they contribute money to your retirement account based on what you contribute from your paycheck. You only receive it if you participate in the 401(k) and contribute enough to trigger it.

Common match formulas:

• 50% match up to 6% of salary: You contribute 6%, employer adds 3%. (Most common)
• 100% match up to 3% of salary: You contribute 3%, employer adds 3%.
• Dollar-for-dollar up to 4%: You contribute 4%, employer adds 4%.

The Minimum Contribution to Get the Full Match

Example: 50% match up to 6%
To get the full 3% match, you must contribute at least 6% of your salary. Contributing only 4% gets you a 2% match — leaving 1% unclaimed.

If your salary is $75,000:

• Your 6% contribution: $4,500
• Employer 3% match: $2,250
• Total to retirement: $6,750 for contributing $4,500 — a 50% instant return

Vesting Schedules: The Catch

Matched contributions may not be fully yours right away. Common vesting schedules:

• Immediate vesting: You own the match right away.
• Cliff vesting: 0% until a milestone (e.g., 3 years), then 100% instantly. Leave before 3 years and you lose all matched funds.
• Graded vesting: Vest gradually over 2 to 6 years (e.g., 20% per year).

Your own contributions are always 100% vested immediately. Know your employer’s vesting schedule, especially if you are considering leaving.

The True-Up Trap

Some employees max out their 401(k) early in the year and stop contributing. If contributions stop, the employer match may also stop for remaining months. Some employers offer a “true-up” at year end; many do not.

To be safe: spread contributions evenly throughout the year so you are contributing something every pay period.

What to Do After Capturing the Full Match

1. Max out an IRA (Roth or traditional). Limit in 2026: $7,000 ($8,000 if 50+)
2. Max out your 401(k) beyond the match. Limit in 2026: $23,500 ($31,000 if 50+)
3. Open a taxable brokerage account for additional investing

2026 Contribution Limits

• Employee 401(k) limit: $23,500
• Catch-up contribution (age 50+): additional $7,500
• Super catch-up (age 60–63 under SECURE 2.0): additional $11,250
• Total employer + employee limit: $70,000

If Your Employer Does Not Offer a Match

Still contribute to your 401(k) if it has good, low-cost options. But if the plan has only high-expense-ratio funds and no match, prioritize a Roth or traditional IRA at a low-cost broker first.

Bottom Line

The employer 401(k) match is the single best return on investment available to most workers. Contribute at least enough to capture the full match before anything else. Know your vesting schedule, spread contributions throughout the year, and work through the full savings priority stack once the match is secured.

Treasury bills — also called T-bills — are short-term debt securities issued by the U.S. federal government. They are considered one of the safest investments in the world because they are backed by the full faith and credit of the United States government.

T-bills have become especially popular in recent years as a way to earn competitive returns on cash without taking on significant risk.

How T-Bills Work

T-bills are sold at a discount to their face value. You buy them for less than their face value and receive the full face value when they mature. The difference is your return.

Example: You buy a $10,000 T-bill for $9,750. When it matures 26 weeks later, you receive $10,000. Your return is $250.

T-Bill Maturities

• 4 weeks (approximately 1 month)
• 8 weeks (approximately 2 months)
• 13 weeks (approximately 3 months)
• 17 weeks (approximately 4 months)
• 26 weeks (approximately 6 months)
• 52 weeks (approximately 1 year)

How T-Bills Are Taxed

• Subject to federal income tax in the year the bill matures
• Exempt from state and local income taxes — a major advantage for investors in high-tax states like California or New York

How to Buy T-Bills

Option 1: TreasuryDirect.gov

The U.S. Treasury’s direct platform lets you buy T-bills with no fees. Minimum purchase is $100. Auctions happen weekly. The interface is dated, and selling before maturity is complicated — best if you plan to hold to maturity.

Option 2: Through a Brokerage

Most major brokerages (Fidelity, Schwab, Vanguard, Interactive Brokers) offer T-bills in the secondary market. This gives you more flexibility to sell before maturity. Look in the “Fixed Income” or “Bonds” section of your brokerage.

T-Bills vs. High-Yield Savings Accounts vs. CDs

Who Should Buy T-Bills?

• Investors in high-tax states who want the state tax exemption
• Anyone parking cash for a known future expense due within a year
• Conservative investors who want maximum safety

Bottom Line

T-bills are a simple, safe way to earn a return on cash you do not need right away. The state tax exemption and government backing make them a strong alternative to high-yield savings accounts, particularly for investors in high-income-tax states.