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Investing

What is a retirement account?

The meaning

Special investing accounts that come with tax perks specifically designed to help people save for retirement. A 401(k) is offered through your employer and often includes a match (free money from your employer up to a certain amount). An IRA, or Individual Retirement Account, is one you open on your own. Both let your investments grow in a way that’s more tax-friendly than a regular investing account. We walk through how most people use these in The Retirement Plan Most People Follow.

Example
  1. $7,5002026 yearly limit
  2. GrowsNo yearly tax
  3. Tax-freeIn retirement
Inside a Roth IRA, growth and payouts are never taxed if you follow the rules.
Walk through the numbers

In a Roth IRA you can put in up to $7,500 for 2026. Dividends and growth inside it are not taxed, and you can withdraw earnings tax-free in retirement if you follow the rules.

Why it matters

The tax breaks mean more of your money stays invested and compounding for decades.

Read: The Retirement Plan Most People Follow →Compare: Brokerage account vs Roth IRA →

Related terms

Brokerage accountThe account where you buy, hold and sell your investments.CompoundingEarning returns on your past returns, so growth speeds up over time.Mutual fundA fund that pools money from many people and is priced once a day.Capital gainsThe profit you make when you sell an investment for more than you paid.

See all 34 terms · Read the full glossary

For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.