Think Beyond Retirement AccountsMost people think if they max out their 401(k)s (and get their employers' matching contributions) and contribute to their IRAs on top of that, they've done enough. Doing both is great, but in most cases you'll need to save even more. "We all get hung up on retirement money being only in tax-advantaged retirement accounts, but the reality is we need good old-fashioned savings too, even if it is in something that isn't called a retirement account," says Adam Leone, a certified financial planner at Modera Wealth Management. Leone suggests the time honored strategy of paying yourself first. Just as you never lay a hand on the money that goes into your 401(k), set up a direct deposit into your taxable retirement account to make sure you actually put the money away. Stick with low-cost index funds and ETFs and stocks bought through discount brokerage firms to keep costs low, says Leone.
And keep in mind that taxable retirement savings accounts are a good way to diversify your investments into sectors such as real estate and energy that aren't routinely offered in most employer 401(k) options. Master Limited Partnerships, for instance, can be a great high-yield retirement investment, but they are a lousy retirement account investment because of the tax treatment. "You can use your after-tax retirement savings to truly diversify your nest egg," says Leone.