NEW YORK (MainStreet) — Employees who have been contributing like a champ to their company’s 401(k) by allocating the maximum amount should strive to save even more.

They should also not overlook the opportunity to invest in an IRA, said Joe Jennings, senior vice president of PNC Wealth Management in Baltimore. While having a retirement plan at work might impact an individual’s ability to deduct IRA contributions for tax purposes, “it does not close the door to the individual retirement account,” he said.

Allocating funds into your 401(k) and an IRA provides the opportunity to invest more for retirement. An individual can contribute up to $18,000 to his employer’s 401(k) plan for 2015, plus an extra $6,000 “catch up” contribution if he will be age 50 or older by the end of the year.

“Imagine that starting at age 40, an individual contributed the 2015 maximum not including the catch up amount for 25 years and the account earned an average annual return of 7%,” Jennings said. “That person’s account could hold as much as $1.2 million at age 65.”

If you want to contribute even more, team that up with an IRA. For 2015, a person may be able to contribute up to $5,500 to an IRA, plus an extra $1,000 if he is 50 or over. Depositing $5,500 a year for 25 years in an IRA that earns 7% a year would hypothetically add nearly $375,000 in assets, he said.

“An individual in his or her 20s can see even more dramatic results,” Jennings said. “If an investor starts saving now, imagine what he or she will have when they are 65. Even if an individual can’t afford to fully fund a 401(k) plan, anything he or she does now will have a positive impact years from now.”

While most advisers recommend that you invest the maximum amount in your company’s 401(k) to receive the matching portion, funding an IRA is also advisable, because it offers a greater breadth of investment options.

Saving For Retirement Early Is Key

The more you can save when you are younger means you will likely build a larger nest egg. While tax deferred investment plans are a bonus, don’t limit your savings to those options. Supplement your savings by allocating money into tax advantaged plans such as a brokerage account or Roth IRA, said Robert Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Penn.

The easiest method is to purchase shares in a large capitalization index fund such as the popular S&P 500 index. Many funds allow you start off with investing a minimum amount as low as $1,000. As you receive increases in your salary, you can purchase more shares. Invest the amount of your raise and "try to act as though" you didn't receive it, he said. 

“These funds are also very low cost and allow more of the investor’s funds to be put to work for them,” he said.

Funding your retirement portfolio in your 20s and 30s is the “greatest ally of the investor,” Johnson said. Avoid waiting too long, because the interest you earn helps increase your nest egg.

“Individuals who fail to start saving for retirement early in their careers are playing catch up and often simply cannot make up for lost time,” he said.

How Compound Interest Benefits Early Savers

If someone saves even $5,000 per year starting at age 25 and earns 10% annually on that investment, he will have amassed over $2.2 million by the age 65, Johnson said. If someone saves double that amount -- $10,000 per year -- starting just ten years later at age 35 and earns 10% annually on that investment, he will have amassed less than $1.7 million by age 65.

“That is why one investment axiom that investors should embrace is “it is about time in the market and not timing the market,” he said.

While you don't get tax advantages if you open a brokerage account, one benefit is that you can access it whenever you want, said Matt Tuttle, CEO of Tuttle Tactical Management in Stamford, Conn.

“Just because you have maxed out your 401(k), it doesn't mean you have to stop saving,” he said. “Don't let the annuity and insurance guys talk you into buying annuities or insurance purely for the tax advantages. You always give something up to get something. The key is to save as much as you comfortably can.”

--Written by Ellen Chang for MainStreet