How to Start a Retirement Fund (And Get Caught Up)
Start retirement planning today, even if you’re behind.
Published Tuesday, September 9, 2025 to Articles
Thinking ahead to your retirement years? You’re probably thinking about all the fun stuff you’re going to do when you leave your working years behind.
They just might be the best years of your life.
But have you ever thought about how you’re going to pay for your retirement years? You’ll need to cover necessities like housing and food, in addition to all the luxuries you’re looking forward to.
If you’re a little late starting your retirement planning, you’re not alone. A 2024 survey conducted by Greenwald Research and published by the National Institute on Retirement Security showed that over half of Americans are concerned that they cannot achieve financial security in retirement.
So, let’s talk about how to start a retirement fund and, if needed, how you can get caught up.
And if you’re starting young, the information below still applies, so read on!
What is a Retirement Fund?
A retirement fund is a tax-sheltered investment account. You contribute to the account over many years, usually directly out of your paycheck or through automatic transfer.
Once you reach age 59.5 you become eligible to start taking distributions from your retirement fund. The intention of a retirement account is to fund the rest of your life.
The tax benefits may vary depending on the type of retirement account you choose. For some accounts, you receive the tax benefits on your contributions. For others, you receive the benefits on your distributions in retirement.
The Different Types of Retirement Funds
There are several retirement accounts that may be available to you. Here are some of the most common:
401(k)
This type of retirement fund is offered by companies to their employees. You contribute to this account directly from your paycheck. In many cases, your employee may even match a certain percentage of your contribution.
Individual Retirement Account (IRA)
An IRA is an investment account to help you save for retirement. You can fund your IRA with cash or check, or via electronic deposit. Many people opt to set up automatic deposits to fund their account regularly.
The tax benefits for your IRA will depend on whether you have a Traditional IRA or a Roth IRA. More details on tax benefits are included below.
Simple Employee Pension (SEP)
This allows employers of any size to contribute funds to a Traditional IRA for their employees. This would be a good option if you are self-employed.
Other Retirement Funds
Some other relevant, yet less-common retirement funds include:
- 403(b) for employees of nonprofit organizations.
- 457(b) for employees of some state and local governments.
Retirement Fund Taxes
The way you pay taxes on your retirement fund will vary depending on what type of account you have.
401(k) Taxes
With a 401(k), you make pre-tax contributions directly from your paycheck. This means your funds are deposited to your retirement account before taxes are taken out. Your retirement distributions will be subject to taxation just like your current paycheck.
Traditional IRA and SEPs
With a Traditional IRA, your contributions are tax deductible. This means at the end of the year, you can reduce the amount you contributed to your IRA from your tax liability. So, you may get a bigger tax refund.
Just like with a 401(k) your retirement distributions will be taxed.
These rules also apply to an SEP.
Roth IRA
With a Roth IRA, your contributions are not tax deductible. But your retirement distributions will not be taxed.
Retirement Fund Contribution Limits
The amount you can contribute each year varies depending on your retirement fund type.
| Your annual contribution limit | Combined annual contribution limit (including employer match) | Catch-up contribution increase for people 50 years or older | |
|---|---|---|---|
| 401(k) | $23,000 | $70,000 | Additional $7,500 per year |
| Traditional and Roth IRA | $7,000 | N/A | Additional $1,000 per year |
| Simple Employee Pension (SEP) | $7,000 (combined with IRAs) | N/A | Additional $1,000 per year |
401(k) Contribution Limits
If you’re under 50 years old, you may contribute up to $23,500 per year. The combined limit between your contributions and your employer’s matching funds is $70,000.
If you’re 50 or older, you may contribute an additional $7,500 per year.
Traditional and Roth IRAs, and SEPs
If you’re under 50 years old, you may contribute up to $7,000 per year to an IRA or SEP. If you’re 50 or older, you may contribute an additional $1,000 per year.
These limits apply to all your IRAs combined.
How to Catch Your Retirement Fund Up
If you started your retirement fund later than you would have liked, there are ways you can catch up. Here are a few tips to help you start:
Take Advantage of Catch-Up Contributions
If you’re 50 years or older, the maximum amount you can contribute to a retirement fund increases. You can contribute an additional $7,500 to a 401(k) or an additional $1,000 to an IRA or SEP.
Find New Investments
Consider working with a financial advisor or opening a standard brokerage account and invest your money in stocks, bonds, mutual funds and more. There are typically no limits to how much you can invest and you can sell your investments and withdraw the funds at any time.
Pro Tip: Some investments can be risky and profits are subject to taxes. So, we recommend working with a financial advisor or other financial professional to make smart investing choices.
Open an IRA CD
Just like a regular certificate of deposit (CD), an IRA CD earns a fixed rate for a set amount of time. Plus, it’s insured by NCUA, which makes it as safe as investments get.
Learn more about all our CDs, including IRA CDs.
Which Retirement Fund is Best?
There’s no single retirement fund that is universally the best for everyone. The one you pick will likely depend on your situation and personal preference.
If you want to defer taxes now, and pay taxes on your distributions, you’ll choose a Traditional IRA. If you’d rather pay taxes now, and take distributions tax-free, you’d want a Roth IRA.
Or, if your employer offers a retirement plan, like a 401(k), that may be the best route.
Frequently Asked Questions: Starting a Retirement Fund
Final Thoughts: Start Retirement Planning Today
Retirement planning is a long journey. But with the right retirement funds and investments, you can ensure your financial security and live your golden years comfortably.
Ready to start your retirement fund? Learn more about Veridian’s IRA and open one today. Or, if you want to explore other investment options, check out Veridian Investment Services.
See Veridian's IRAs Open an IRA Go to Veridian Investment Services