Retirement account optimization: Reassessing retirement savings strategies

By Kyle C. Miller and Gina Coletti

Planning for retirement is one of the most important financial journeys you’ll undertake. As you proceed through your career, your retirement savings strategy should evolve to maximize growth, minimize fees, and ensure you’re taking full advantage of available benefits. Whether you’re just starting out or reassessing your approach mid-career, optimizing your retirement accounts can make a significant difference in your long-term financial security.

Maximize employer contributions: Don’t leave money on the table

Many companies offer to match a percentage of your contributions, and one of the most effective ways to boost your retirement savings is to take full advantage of your employer’s 401(k) match—which is essentially free money added to your retirement fund. Failing to contribute enough to receive the full match is a missed opportunity. At a minimum, ensure you’re contributing enough to get the maximum employer match. If possible, aim to max out your annual 401(k) contributions, which for 2025 is $23,500 for those under 50, with an additional $7,500 catch-up contribution allowed for those 50 and older.

Automate contributions for consistent growth

Consistency is key to building a robust retirement portfolio. Automating your contributions ensures you never miss a deposit and helps you reach your annual contribution limits. Most major investment platforms allow you to set up automatic transfers from your bank account or paycheck. This “set it and forget it” approach can simplify your financial life and help you build wealth over time.

In addition to automated contributions, unexpected income, whether it’s a raise, bonus, or tax refund, presents a valuable opportunity to accelerate your retirement savings. Instead of spending these funds immediately, consider directing a portion (or even all) toward your retirement accounts. Increasing your contribution rate when you receive a salary increase can help you build wealth without impacting your existing budget. Over time, consistently applying this strategy can significantly boost your retirement funds and shorten the gap between where you are today and where you want to be.

Understand vesting schedules and plan rules

Vesting refers to the portion of your employer’s contributions to your retirement account that you actually own. While your own contributions are always 100% vested, employer contributions may be subject to a vesting schedule. Review your plan documents annually to understand when you’ll be fully vested and eligible to keep all employer contributions, especially if you’re considering a job change.

Know the differences: 401(k), 403(b), SEP, and IRA Plans

While 401(k) plans are common in the private sector, public employees may have access to 403(b) or other state-mandated retirement plans. The core principles of maximizing contributions and taking advantage of employer matches apply across these plans, but there are important nuances. For example, 403(b) plans may have stricter rules regarding rollovers. Self-employed individuals should explore Simplified Employee Pension (SEP) plans, which allow for higher contribution limits based on business income. Consulting with a tax advisor or financial planner can help you determine the best plan for your situation.

Consider health savings accounts as supplemental retirement tools

If you’re enrolled in a high-deductible health plan, a health savings account (HSA) offers one of the most tax-efficient ways to save. HSAs carry a triple tax advantage:

• Contributions are tax-deductible.
• Growth is tax-free.
• Qualified withdrawals for medical expenses are also tax-free.

After age 65, HSA funds can be used for any purpose, medical or otherwise, with withdrawals for nonmedical expenses taxed at ordinary income rates (those under age 65 incur a 20% tax penalty on nonmedical withdrawals). This flexibility makes HSAs an underutilized but powerful supplement to retirement savings, especially for high-income earners who have already maximized other tax-advantaged accounts.

Consolidate accounts to simplify management and reduce fees

Over the course of your career, it’s common to accumulate multiple retirement accounts from different employers. Consolidating these accounts by rolling over old 401(k)s into your current employer’s plan or into an IRA can streamline your finances and make it easier to track your progress.

Additionally, some company-sponsored accounts charge higher fees for accounts held by former employees, so consolidating can also save you money. Keeping your retirement assets in one place enhances your ability to manage investments, rebalance your portfolio, and ensure your savings are working efficiently for you.

Final thoughts: Review and reassess regularly

Retirement account optimization isn’t a one-time task. Life changes, job transitions, and evolving financial goals all warrant a fresh look at your retirement strategy. Start by reviewing your current retirement accounts, contribution rates, and investment choices. Make adjustments as needed, and don’t hesitate to seek professional advice when saving for retirement.

Nixon Peabody Trust Company offers comprehensive retirement planning and trust services designed to help you navigate complex decisions, optimize your savings, and help you stay on track to achieve a secure and comfortable retirement.

Kyle C. Miller
Trust Advisor
+1 617.345.6052
kcmiller@nixonpeabody.com

Gina Coletti
Chief Fiduciary Officer
+1 617.345.1110
gcoletti@nixonpeabody.com