Financial advisors love to talk about the perfect retirement contribution sequence — the one-two-three-four punch that supposedly sets you up for long-term security.

On paper, it is great, but for most Americans, it’s not remotely realistic. Let’s start with the idealized version.

1. Contribute Enough to Get Your Full 401(k) Match

This is free money, and skipping it is leaving compensation on the table. Most employers match somewhere between 3–6%, and that should always be your first priority.

2. Max Out Your IRA

With its flexibility and tax advantages, a Roth or Traditional IRA is often the next best tool for retirement savings — especially if your employer plan has high fees or limited options.

For example, Roth IRAs let your money grow tax-free and allow you to withdraw it in retirement without paying any taxes — a big win if you expect to be in a higher tax bracket later.

3. Return to the 401(k) to Keep Contributing

If you’ve still got room in your budget, go back to your workplace plan and try to hit the $23,000 annual maximum contribution (for 2025).

The tax deferral adds up, especially for higher earners.

4. If You Still Have Funds to Contribute, Open a Brokerage Account

Once your retirement vehicles are full, this is where you can get creative. Buying index funds, picking stocks, or allocating to assets with higher risk/reward profiles can become its own education, in addition to seeing what makes the world go round.

Just keep in mind that you are playing the long game here, too.

The Problem: Most People Never Get Past Step One

This sequence might make sense to people who spend a lot of time reading finance blogs or following expert advice. But for most working Americans, it’s not remotely realistic.

And it’s not a question of bad habits or financial illiteracy. The problem is structural.

• 48% of private-sector employees — around 57 million people — don’t even have access to a retirement plan through work (AARP, 2022).
  
  
  
  
  

• Among those who do have a 401(k), 40% aren’t contributing at all (CNBC, 2023).
  
  
  
  
  

• Of those who are contributing, the average employee saves just 7.4% of income — far below what’s needed for a stable retirement (Vanguard, 2023).
  
  
  
  
  

• Even worse, many drain what little they’ve saved: 41.4% of workers who left a job between 2014–2016 cashed out their 401(k)s entirely (HBR, 2023).

It’s not that people won’t save. It’s that many simply can’t.

Between rent, childcare, insurance, car payments, and groceries, today’s costs wipe out any margin to plan for the future. If your monthly surplus is $50, the math doesn’t work. That $1,000 you might invest in an IRA won’t feel like much when the return is $100, but your heating bill is due next week.

A More Honest Retirement Conversation

We don’t need more shame-driven advice. We need tools that reflect the real-world constraints people face — tools that recognize the value of long-term investing even if you can’t front the full cost today.

It’s time to stop assuming that every worker can follow the ideal contribution ladder. The market may compound wealth, but only if you can get in.