If You Earn 6-Figures, Your Retirement Plan Needs an Upgrade.

Simple, proven strategies to help high-income professionals maximize their retirement savings.

If you’re making over $100,000 a year and your retirement strategy still looks the same as it did when you were making $40,000 a year, we should talk.

Because once your income crosses six figures, the rules change. Your tax exposure changes. Your saving capacity changes. And the opportunities available to you expand dramatically.

But I see high earners make the same mistake over and over again.

They keep using entry-level retirement strategies long after their income has outgrown them.

In this story, I’m going to walk you through what your retirement strategy should actually look like once you’re earning over $100,000, including what type of accounts you should be using, the priorities of the different types of accounts you’re using, where tax savings really matter and where it doesn’t, and how to build flexibility into your long-term plan.

1: Start with a foundation, but don’t stop there.

First, let’s be clear. The basics still matter at a hundred grand of income. You still need an emergency fund and to work your way out of debt with a debt snowball if you aren’t already, and consistent monthly savings habits. But here’s the shift.

Once you cross into that six-figure income territory, the goal is no longer just participation. The goal becomes optimization.

At lower income levels, getting money into the retirement account is the win. Let’s get the money in there.

At higher income levels, how you invest that money, how you allocate it between accounts, start to matter a lot more.

Now, one of my first strategies, and I’ve been talking about this a lot the last few years, I call it match and out. What it means is that if you have a workplace retirement plan with a 401 (k) match, this is still step one.

This is the closest thing to free money in the tax code.

Let’s say you earn $120,000 a year, and your employer offers a 4% 401k match. So if you contribute 4% (($4,80)0), the employer adds another $4,800.

They match it dollar for dollar. That is an immediate 100% return on that portion of your money.

No investment strategy is going to beat that. And you want to double that money. And what’s crazy, estimates are that up to 25% of working Americans don’t even take advantage of this.

Seriously, double your money, 25% of Americans don’t do it. So, if you’re leaving the match on the table, you are voluntarily taking a pay cut.

Now, why do I call it match and out? Because sometimes the best place to invest your money is not in the workplace 401 (k).

So, I want to get the match, get that 100% return, invest in whatever they have to offer, because it’s better than nothing, and I already got a 100% match, but then take the additional contribution I would have made at work, which a lot of people just do blindly.

I’m going to take that money and put it in a different type of account where maybe I have more control.

But again, if they’re going to match, I want to get that match, and then I get out.

2 The Roth IRA.

Now, you may be asking, “I already have a 401 (k) at work, and I may even make too much money. I can’t do a Roth IRA. That’s what my accountant told me.”

They’re wrong. And you’re thinking, “Well, if I’ve got this 401k at work, why am I going to go home or on my own go do a Roth IRA? That’s taking the money out.”

You know, you’re going to match, and then take what you would normally put in that 401k, now take it out of the 401k, take it out of the equation. And that’s where I want you to go into a Roth IRA.

With an individual Roth IRA, you can invest it in what you know best.

It could be ETFs, stocks, bonds, mutual funds, it could be crypto, it could be real estate, it could be a small business.

But when you’re a high-income earner, once I get the match, I want more control.

I want to take my next $7,500 this year and put it into a Roth IRA where I have complete control, before I go back into the 401 (k) at work.

So, I want to fund my Roth IRA in a self-directed account where I can control it.

Now, why do I like the Roth IRA? Well, fundamentally, it’s tax-free growth. I can invest in it anything, pay zero tax, and pull it out tax-free.

Now, I’ve got to wait till I’m 59 and a half, but until I get there, I can always pull out my contributions penalty-free and tax-free.

The growth has to stay there, or there’s a penalty if I pull it out early.

But if there is an emergency and I need it, I can always pull out my contributions. Now, there are a lot of benefits of Roth IRAs, but the fundamental concept is tax-free growth and tax-free withdrawals.

So, if I have enough money, I’m going to start going through a hierarchy. I’m going to do that match, then I’m going to fund my Roth IRA. And the goal is not to guess today which bucket will be best.

You want to plan so that you’re not having to guess about this later.

3. HSA (health savings account).

Now, that might surprise you, but if you’re eligible for a health savings account, and I’ll talk about that in a moment, this becomes very attractive because you get a tax deduction when you put money in an HSA, then it grows tax-free, and it comes out tax-free for any qualified medical expense.

And you can pull out money tomorrow if you want to.

You don’t have to wait till you’re 59 and a half. So, it’s like a Roth on steroids.

Now, it’s neck and neck with the Roth on why it’s so important, because it’s only for medical expenses.

But medical expenses are the number one reason for bankruptcy in America. So, we know this is a big deal for people.

So, if I can be building up my Roth at the same time I’m building my HSA, let’s say you do your match, remember, and you only have an extra $6,000 to put away, 500 bucks a month, let’s say, and you’re trying to be a good saver.

I would say put 500 in your Roth, put 500 in your HSA, back and forth, back and forth.

So, at the end of the year, you’ve got three grand in each account. Now, the more money you’re making, you’re like, “I can double down. Now, I’m going to end up with six grand in this account and six grand in that account.”

Now, the contribution amounts are going to change every year and get bigger and bigger, adjusted for inflation.

But the point is, when we look at the tiers of where we’re going to go on this, again, we’re going to get our match, 100% return.

We’re going to do the Roth and the HSA almost in tandem, and we’re going to be building up those accounts until we max them out.

Now, an example is a married couple maxing out an HSA contribution. 2026 is $8,750.

Now, if you are over age 55 and up to age 65, you can put in $1,000 extra.

So, we’re at $10,750. Now, you get a tax deduction on the front page of your tax return for that, no matter what your income level is, and it starts growing tax-free and coming out tax-free for medical.

Now, meanwhile, this year, you can put up to $7,500 per person in a Roth IRA, and if you’re over age 50, an extra $1,100.

So, you’re at $8,600 plus the $10,750.

Now, if you do both accounts and you’ve got the wherewithal as you start making more money, you’re putting away almost $28,000 into tax-free vehicles. And that doesn’t even count the match at the very beginning.

So, what’s amazing here, and I’ve said this so many times, is that becoming wealthy or getting rich is not a quick equation. It’s not a get-rich-quick.

Wealthy people have been putting away money slowly but surely, investing in what they know, and being consistent.

And what I’m trying to share in this story is that process. And as you go through these different accounts and you start to get more engaged, what we’re trying to do is build these buckets up simultaneously so we have the wealth to rely on later in life.

Let’s say you’re like, “Aditya, we hit the lottery this year.” Not quite, but you had a good year in your business; maybe you sold some real estate, exited a business, or your business is just really hitting another level. And congratulations, that doesn’t happen to everybody.

And let’s say that’s happening: you’ve got your match, maybe through your spouse’s day job, you got benefits, and now you’re building up a Roth, and you’re building up the HSA.

4. Pre-tax contributions strategically

What next? Well, this is where using pre-tax contributions strategically could come into play.

Now, what a pre-tax contribution is: you’re going to put money into that 401 (k) back at work.

So, you did the match, got out, did the tax-free accounts, and you got extra money. You could go back there to the 401k, put money in, and get a tax deduction to do so.

You could actually even set up your own 401 (k) inside your small business. You could do what’s called a defined benefit plan.

All sorts of options. And this is where you start trying to get a tax deduction to put the money away. And why I call it pre-tax is because you get a tax deduction, it grows tax-deferred, and then you’ll be taxed when you pull it out later.

Now, you may think, “I love that Roth IRA idea. I never get taxed again.” Yeah, but there are limits on how much you can put away.

So, the pre-tax contributions are pretty awesome because now I can put away even more money in a different type of bucket, but get a tax deduction.

So, rather than tax-free later, I’m now using the balancing act of maybe some tax deductions now.

Eating that apple with different bites from different angles, and it gets really cool.

Now, in summary, why would I do that? By using a pre-tax account, such as a traditional 401 (k) or a DB plan, I’m going to reduce my taxable income.

I’m going to drop my income into an even lower marginal bracket, and the income I may end up being taxed on.

I’m going to improve my cash flow efficiency because I’m being smart about my next taxable dollar. An example would be if I earn $130,000 and I contribute $23,000 to a traditional 401k, my taxable income drops to roughly $107,000, and there may even be a match in there.

So, that can save you several thousand dollars in federal and state taxes and put you in a lower bracket.

This is the real immediate tax leverage this year. Meanwhile, your Roth and your HSA are experiencing tax-free growth over here. High earners should not ignore this tool.

Now, I want to make one other important point that kind of stacks on this whole process and the concept. And that is, if you have small business income, you’re going to have more options.

You can have multiple 401k’s. You can have a 401k at work where you’re getting the match, but then set up your own 401k for your small business.

It could be a consulting business. Holy crap, you can set up a solo 401 (k) for driving Uber.

The point is, if you have a small business with income, and especially an S corporation, now I can start adding additional strategies to the equation.

I have clients who literally start a small business to fund future retirement, and never even take any profit out, because that’s the machine that’s going to pay for the future.

And that’s just a concept, but I want you to see what the possibilities might be.

Now, a couple of cautionary points.

5: Avoid the one-account trap.

One of the biggest mistakes I see high earners make is over-concentrating in a single retirement bucket.

They find one that makes sense and then just go all in. Hopefully, you’ve already noticed here that multiple ways of investing, strategies, and accounts will actually make you more powerful and more successful.

Good retirement planning at higher income levels is about balance.

A balance across pre-tax accounts, Roth accounts, health savings accounts, taxable investments, and non-retirement account assets.

It’s about how efficiently you can access all this money later in different ways or in different situations.

Let’s just do one quick example here, a six-figure earner example.

So, let’s assume this individual, a single individual, makes $125,000 a year, is 40 years old, and they have an employer 401 (k).

A balanced approach might look like capturing the match first.

So, a 4% match on approximately $125,000 might be around five grand. So, let’s get that match and then move on.

Then, we’re going to come out and do the Roth IRA.

We’ll pay tax on that money first, but that account will never be taxed again. So, we can put away $7,500 there.

Now, what’s interesting is you’ve put away $12,500, but it’s already worth $17,500 because of the match.

That match is the key part that allows you to double your money on that first contribution. Then you go over to the Roth, and you’re going to invest that self-directed Roth in what you want, and then you’re going to go fund the HSA for your healthcare, which is another $4,400.

So, we’re at 20 grand in extremely tax-efficient investing with maybe only about 15 grand of actual out-of-pocket dollars, because you’re being smart.

And then you can fund the HSA if you’re eligible, which is around $4,400 this year.

Then we can go back to the traditional 4401 (k)and get a tax write-off if we want.

Then we can even invest in our own name, rental properties, or who knows what.

So, there are so many options here to start building wealth. And the exact mix depends on your goals, your tax bracket, and timeline. But the key is intentional layering.

If your income has crossed into six figures, your retirement strategy should evolve with it.

The basics still matter, but optimization, tax diversification, and planning start to play a much, much bigger role.