I earned $500K last year with $700K saved. How do I maximize retirement contributions on one income?

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Although we don’t have further details, such as your age, proximity to retirement, or your plans for continued work, we can say that you appear to be doing well. Even if you plan to save far more before leaving work for the final time, an annual income of $500,000 should make the task a bit easier – even if you’re a one-income household.

The advice that suits your situation is similar to the advice most people receive, regardless of their income or savings. It’s all about strategy and consistency.

Pay yourself first

If your typical pattern is to cover the cost of household needs and wants before determining how much you have left to invest and save, now is a good time to adjust your approach. The next time you work on a household budget, ensure that the first expense accounted for is the money you plan to save for retirement.

Retirement is going to arrive one day, whether you expect it or not, and unless saving for retirement is prioritized, it’s more likely to fall through the cracks.

Start with an employer-sponsored plan

Given your income, you probably want to take advantage of an employer-sponsored retirement plan, especially if your employer offers to match a portion of your contribution. For 2025, the contribution limits for 401(k) plans are as follows:

• Employee contribution: $23,000
• Catch-up contribution for employees 50 to 59 or 64 or older: $7,500
• Catch-up contribution for those between 60 and 63: $11,250 (if your plan allows)

Don’t forget about IRAs

Even if you’ve maxed out your 401(k), consider contributing to a traditional IRA. The contribution limit for 2025 is $7,500, with an additional catch-up contribution of $1,000 for individuals aged 50 and older. While your current income precludes you from deducting these contributions from your taxable income, an IRA will provide an additional source of income in retirement.

Note: Highly compensated employees (HCEs) may be subject to additional contribution limits; therefore, you should consult with your plan administrator or financial advisor for specific details related to your situation.

Set up automatic contributions

Depending on where you live and how you spend, earning $500,000 a year may not make you feel like you’re swimming in money. In fact, if you reside in a high-cost-of-living area, you may sometimes feel like you’re just getting by. That makes automatic contributions to retirement savings even more critical. It’s easier to save money that you never see in your checking account or hold in your hands.

If you haven’t already, now is the time to set up automatic contributions to all your retirement accounts.

Consider your own business

If you’re working for someone else, consider starting your own small business. There are a couple of significant advantages associated with doing so:

1. You’ll have more income to contribute to retirement.
2. You can take advantage of generous retirement savings plans like a Solo 401(k) or Simplified Employee Pension (SEP) IRA. As both the “employee” and the “employer,” you may find that you can contribute more through one of these plans, and when added to any other contributions you’re making, could turbo-boost your savings.

Get everyone on board

If you’re providing the sole income, make sure the rest of your household understands your retirement goals. That may mean cutting back on typical luxuries to maximize retirement savings or rearranging your household budget in a way that allows for more saving and less spending.  With a partner on board, you may find that you come up with fun, creative ways to celebrate reaching specific savings goals.

Don’t go it alone

Whether you work with an experienced financial or retirement advisor, it’s good to have another set of eyes to help review your plan and make tweaks where needed. Look for a fiduciary, a financial professional who is legally obligated to put your financial needs above their own (for example, they don’t make money by selling you investment products).

An annual income of $500,000 is a good problem to have, but it may also mean that you’ll need to save more for retirement to maintain your lifestyle. Fortunately, with $700,000 tucked away, you’ve made a good start. All that’s left to do is commit to a plan you can stick with and know you’ll thank yourself one day for doing so. 

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