How to Prioritize Your Retirement Savings Accounts

A guide to building a tax-efficient savings strategy 

Saving for retirement can become more complicated as your career grows. A high-income professional may have access to a 401(k), deferred compensation plan, health savings account, backdoor Roth strategy, and taxable portfolio. The key question is no longer just, “Am I saving enough?” It also becomes, “Where should I be prioritizing my savings?” 

The answer isn’t always straightforward. It depends on your cash needs, employer benefits, tax situation, family priorities, and retirement timeline. Not every retirement savings account offers the same mix of tax advantages, flexibility, and long-term value. For high-net-worth families, the order should reflect the full financial plan rather than function as a rigid checklist. 

Why Prioritizing Retirement Savings Matters

Not All Retirement Savings Vehicles Offer the Same Benefits

Traditional retirement accounts may provide a current tax benefit and tax-deferred growth. Roth accounts use after-tax dollars, but may provide tax-free qualified withdrawals. Taxable accounts lack those retirement-specific benefits, yet generally offer greater access and flexibility. Employer matching adds another layer, and failing to capture the full match may mean leaving part of your compensation on the table.

Cash liquidity also matters. Before maximizing retirement accounts, confirm that you have accessible funds for emergencies, major purchases, taxes, or short-term opportunities. The goal should not be to simply to reduce your current tax bill. Ultimately, it’s to build a useful mix of taxable, tax-deferred, and potentially tax-free assets for retirement.  

The Cost of Saving in the Wrong Account

An inefficient choice can mean missing an employer match, losing a tax advantage, or placing too much wealth behind retirement-account restrictions. Heavy reliance on pre-tax accounts may also increase taxable distributions later, while underusing tax-advantaged accounts may create avoidable higher tax drag. A clear hierarchy helps balance today’s benefits with tomorrow’s growth and flexibility.

The Hierarchy of Retirement Savings Vehicles

Step 1: Build an Emergency Savings Account

An emergency fund provides cash for unexpected expenses, job transition, or family need. It offers liquidity without forcing you to sell investments or tap into retirement assets. It may also help you stay invested during market stress. The appropriate reserve depends on income stability, spending, business ownership, and family obligations. However, in general, it is recommended that families should save about three to six months’ worth of living expenses in an emergency fund.  

Step 2: Capture the Full Employer Match

If your employer offers a match, consider contributing enough to receive it in full before directing additional dollars elsewhere. This match is part of your overall compensation package. Review the vesting schedule, eligible compensation, and contribution timing to maximize your benefit.

Step 3: Maximize Health Savings Account (HSA) Contributions

An HSA can offer tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. Further, if HSA contributions are made via payroll deductions, those contributions avoid employment taxes. Those who can cover current immediate medical bills from cash flow may instead invest their HSA balance and preserve it as a future health care and retirement reserve. Employer deposits count toward the annual limit, so coordinate contributions carefully.

Step 4: Fund Tax-Deferred Retirement Plans and 529 Plans

Next, consider increasing contributions to tax-deferred retirement plans like a traditional 401(k), 403(b), or similar. These accounts may reduce current taxable income and allow for tax-deferred growth. For high earners, the deduction can be valuable, but a large pre-tax balance may create substantial taxable income later. Therefore, tax diversification remains important.

When children’s education is a priority, this step may also include funding 529 plans. The right allocation depends on anticipated education costs, the child’s timeline, available resources, and the parents’ retirement readiness.

Step 5: Consider After-Tax (Backdoor) IRA and 401(k) Contributions

Some higher-income investors may make a nondeductible traditional IRA contribution followed by a Roth conversion. Some employer plans also allow after-tax 401(k) contributions that may be converted to Roth. Existing IRA balances, plan rules, taxes, and conversion procedures can affect the outcome.  

Eligible business owners may also consider profit-sharing, cash balance, or defined benefit plans. These strategies typically require coordinated tax advice.  

Steps 6, 7, & 8: Save Additional Assets in Taxable Accounts, After-Tax Contributions, and Non-Qualified Annuities

After exhausting tax-advantaged opportunities, your additional savings may go to taxable brokerage accounts, other after-tax contributions, or non-qualified annuities. Taxable accounts offer flexibility for early retirement, real estate, charitable giving, family support, and other goals. You may utilize the asset location strategy, placing investments across different account types based on how their income and growth are taxed.

Non-qualified annuities may provide tax-deferred growth. However, their costs, liquidity, product terms, and role in your income plan deserve careful review. For high-net-worth individuals, the best choice depends on how each vehicle supports your tax, estate, legacy, and retirement goals.

How Much Should You Save for Retirement?

Unfortunately, there is no black and white answer to “How much should I save for retirement?” The target depends on current assets, desired lifestyle, retirement age, income stability, longevity, and family commitments. A personalized projection is more useful than a generic benchmark because it connects savings to the life you want to fund.

Early Professionals (Ages 20-34)

Build reserves, capture the employer match, and establish a consistent savings habit. Roth contributions may add tax diversification. For high earners, a 401(k), HSA, backdoor Roth IRA, and deferred compensation plan may work together as a multi-account strategy.  

Minimum Savings: Up to the company match %

Savings Target: 10-15% of your gross income

Mid-Career Professionals (Ages 35-49)

As income rises, increase contributions and consider additional tax-advantaged accounts. Coordinate retirement savings with education, real estate, family support, or business investment. Measure progress against your goals rather than relying only on a broad retirement savings by age benchmark.  

Minimum Savings: 10-15% of your gross income

Savings Target: Annual Contribution Limit

Top Earning Years (Ages 50-65)

Maximize appropriate contribution and catch-up opportunities, then prepare for the shift from accumulation to retirement income. This is also a key period for deferred compensation elections, Roth conversion analysis, tax-bracket planning, and withdrawal sequencing.  

Minimum Savings: Annual Contribution Limit + Catch-up

Savings Target: Work with your advisor to outline savings needed to reach retired spending goals.

High-Income Earners (Any age, Annual Income over $400k)

For households earning more than $400,000 annually, the question often becomes how to spread savings across account types to create tax efficiency, liquidity, and flexibility. Backdoor Roth strategies, workplace after-tax contributions, business retirement plans, taxable portfolios, charitable planning, and estate goals may all be relevant.  

Minimum Savings: Annual Contribution Limit + Catch-up

Savings Target: Work with your advisor to outline savings needed to reach retired spending goals.

Build a Savings Strategy That Can Evolve

A practical savings hierarchy starts with financial stability, captures available employer benefits, and then moves through tax-advantaged and flexible vehicles. However, the order is not a substitute for personalized planning. As income, tax exposure, family responsibilities, and retirement timing change, the strategy should evolve too.

If you would like help prioritizing your retirement savings, book a meeting with us today. Together, we can build a strategy around what you want your wealth to make possible.

FAQs about Retirement Savings

What is the best retirement savings account?

There is no single best retirement savings account for everyone. Often, it may be a combination of accounts. The right choices depend on your employer matching, HSA eligibility, income, tax bracket, liquidity needs, and retirement lifestyle goals. Many people benefit from a mix of taxable, tax-deferred, and potentially tax-free accounts.  

What retirement account should I fund first?

Start with funding an appropriate emergency reserve, then consider investing enough to receive the full employer match. Next, evaluate an HSA, additional employer-plan contributions, IRA strategies, and taxable investments based on your financial and tax situation.  

Should I contribute to an HSA before a Roth IRA?

For many eligible investors, an HSA may deserve priority because of its potential triple (and sometimes quadruple) tax advantage. The choice still may depend on your health plan, medical costs, liquidity, investment options, and need for tax diversification. Funding both may be appropriate for your situation.  

What are the best retirement savings vehicles for high-income earners?

For high earners, there is no objectively best savings vehicle. The options include employer retirement plans, HSAs, backdoor Roth IRAs, after-tax 401(k) contributions with Roth conversion features when available, deferred compensation, cash balance or defined benefit plans for eligible business owners, and taxable investments. The best mix depends on plan rules, taxes, liquidity, retirement timing, and estate or legacy goals.