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When it comes to saving for retirement, the options can feel overwhelming. Between the 401(k), 403(b), and 457(b), it’s easy to wonder where your money should go first. Let’s break it down in a way that actually makes sense.
If your employer offers a 401(k) or 403(b) match, this is the non-negotiable place to start. Always contribute at least enough to get the full match. That’s free money and essentially part of your salary. You’d never turn down a paycheck, so don’t turn this down either.Beyond the match, both the 401(k) (commonly offered in private companies) and the 403(b) (typically for non-profits, schools, and hospitals) are powerful retirement vehicles. They grow tax-deferred, they’re yours (not your employer’s), and they provide a straightforward path to long-term wealth building.
Now, the 457(b) is where things get a little trickier. Yes, contributing to a 457(b) lowers your taxable income today. That’s the upside. But here’s the detail most people miss: the account is technically owned by your employer, not you. That means your money could, in rare cases, be at risk if your employer ever faced financial trouble.For some high-income professionals, the 457(b) makes sense, especially if you’re in a high tax bracket now and expect to be in a lower one later. But it’s not a one-size-fits-all solution. Personally, I’m not the biggest fan of the 457(b) for everyone.
Always invest in your 401(k) or 403(b) up to the employer match. Non-negotiable.Look at the 457(b) only after you’ve maxed out safer, more flexible options like your 401(k), 403(b), Roth IRA, or HSA.Remember: just because you can invest in every account available doesn’t mean you should.Retirement planning isn’t about cramming money into every account you see. It’s about aligning your investments with your goals, your risk tolerance, and the life you actually want to build.
