Why the Optimal Retirement Contribution Sequence Sounds Great — But Doesn’t Work for Most People

Why the Optimal Retirement Contribution Sequence Sounds Great — But Doesn’t Work for Most People

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

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.


No communication by Basic Capital Group Inc. ("BCG"), or any of its affiliates (collectively, "Basic Capital"), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by Basic Capital Advisors, LLC pursuant to a written advisory agreement between such entity and the recipient.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular account or investment strategy will depend on an investor’s individual circumstances and objectives. Investors should carefully consider their investment objectives and risks, as well as charges and expenses of Basic Capital before investing. Basic Capital investments should only be part of your overall investment portfolio.

This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials.

Basic Capital Group Inc, is the direct owner of Basic Capital Markets LLC. Basic Capital Markets LLC has not yet been approved as a member of FINRA/SIPC.

Basic Capital Advisors LLC’s internet-based advisory and administrative services are designed to assist clients in achieving customer defined financial goals. They are not intended to provide comprehensive tax advice or provide comprehensive financial planning with respect to all aspects of your financial situation, nor do they account for specific investments held outside our platform. Investing in securities carries inherent risks, including the possibility of losing money. While asset allocation and diversification aim to manage risk, they do not ensure profits or protect against losses, and past performance does not guarantee future outcomes.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Basic Capital believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency), are not guaranteed by Basic Capital or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

In-app investment advisory services are provided by Basic Capital Advisors LLC ("Basic Capital Advisors"), an SEC registered investment adviser, and a wholly owned subsidiary of Basic Capital Group Inc, a Section C Delaware Corporation.In-app brokerage and custody services are provided by Apex Fintech Solutions LLC, member FINRA/SIPC. IRA plans are provided by Apex Custody Solutions and opened via the Basic Capital application.

Basic Capital is not a bank. Certain services are offered through Plaid, Fragment, Apex and Footprint and none of such entities is affiliated with Basic Capital. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Basic Capital, 137 Grand Street, 4th Floor, New York, NY 10013. 855-800-8322

Articles or information from third-party media outside of this domain may discuss Basic Capital or relate to information contained herein, but Basic Capital does not approve and is not responsible for such content.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest.Investing in private placements requires long-term commitments, and the ability to afford to lose the entire investment.

Investment advisory services are only provided to clients of Basic Capital Advisors, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf.

© 2024 Basic Capital. All rights reserved.

No communication by Basic Capital Group Inc. ("BCG"), or any of its affiliates (collectively, "Basic Capital"), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by Basic Capital Advisors, LLC pursuant to a written advisory agreement between such entity and the recipient.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular account or investment strategy will depend on an investor’s individual circumstances and objectives. Investors should carefully consider their investment objectives and risks, as well as charges and expenses of Basic Capital before investing. Basic Capital investments should only be part of your overall investment portfolio.

This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials.

Basic Capital Group Inc, is the direct owner of Basic Capital Markets LLC. Basic Capital Markets LLC has not yet been approved as a member of FINRA/SIPC.

Basic Capital Advisors LLC’s internet-based advisory and administrative services are designed to assist clients in achieving customer defined financial goals. They are not intended to provide comprehensive tax advice or provide comprehensive financial planning with respect to all aspects of your financial situation, nor do they account for specific investments held outside our platform. Investing in securities carries inherent risks, including the possibility of losing money. While asset allocation and diversification aim to manage risk, they do not ensure profits or protect against losses, and past performance does not guarantee future outcomes.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Basic Capital believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency), are not guaranteed by Basic Capital or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

In-app investment advisory services are provided by Basic Capital Advisors LLC ("Basic Capital Advisors"), an SEC registered investment adviser, and a wholly owned subsidiary of Basic Capital Group Inc, a Section C Delaware Corporation.In-app brokerage and custody services are provided by Apex Fintech Solutions LLC, member FINRA/SIPC. IRA plans are provided by Apex Custody Solutions and opened via the Basic Capital application.

Basic Capital is not a bank. Certain services are offered through Plaid, Fragment, Apex and Footprint and none of such entities is affiliated with Basic Capital. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Basic Capital, 137 Grand Street, 4th Floor, New York, NY 10013. 855-800-8322

Articles or information from third-party media outside of this domain may discuss Basic Capital or relate to information contained herein, but Basic Capital does not approve and is not responsible for such content.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest.Investing in private placements requires long-term commitments, and the ability to afford to lose the entire investment.

Investment advisory services are only provided to clients of Basic Capital Advisors, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf.

© 2024 Basic Capital. All rights reserved.

No communication by Basic Capital Group Inc. ("BCG"), or any of its affiliates (collectively, "Basic Capital"), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by Basic Capital Advisors, LLC pursuant to a written advisory agreement between such entity and the recipient.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular account or investment strategy will depend on an investor’s individual circumstances and objectives. Investors should carefully consider their investment objectives and risks, as well as charges and expenses of Basic Capital before investing. Basic Capital investments should only be part of your overall investment portfolio.

This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials.

Basic Capital Group Inc, is the direct owner of Basic Capital Markets LLC. Basic Capital Markets LLC has not yet been approved as a member of FINRA/SIPC.

Basic Capital Advisors LLC’s internet-based advisory and administrative services are designed to assist clients in achieving customer defined financial goals. They are not intended to provide comprehensive tax advice or provide comprehensive financial planning with respect to all aspects of your financial situation, nor do they account for specific investments held outside our platform. Investing in securities carries inherent risks, including the possibility of losing money. While asset allocation and diversification aim to manage risk, they do not ensure profits or protect against losses, and past performance does not guarantee future outcomes.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Basic Capital believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency), are not guaranteed by Basic Capital or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

In-app investment advisory services are provided by Basic Capital Advisors LLC ("Basic Capital Advisors"), an SEC registered investment adviser, and a wholly owned subsidiary of Basic Capital Group Inc, a Section C Delaware Corporation.In-app brokerage and custody services are provided by Apex Fintech Solutions LLC, member FINRA/SIPC. IRA plans are provided by Apex Custody Solutions and opened via the Basic Capital application.

Basic Capital is not a bank. Certain services are offered through Plaid, Fragment, Apex and Footprint and none of such entities is affiliated with Basic Capital. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Basic Capital, 137 Grand Street, 4th Floor, New York, NY 10013. 855-800-8322

Articles or information from third-party media outside of this domain may discuss Basic Capital or relate to information contained herein, but Basic Capital does not approve and is not responsible for such content.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest.Investing in private placements requires long-term commitments, and the ability to afford to lose the entire investment.

Investment advisory services are only provided to clients of Basic Capital Advisors, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf.

© 2024 Basic Capital. All rights reserved.