How Women Can Invest in Each to Build Wealth

There are many types of retirement accounts, including 401(k)s, IRAs, and Roth accounts—each with its own tax rules, eligibility requirements, and contribution limits. That complexity can feel overwhelming, especially for women who may have limited workplace guidance or access to financial education.

This guide explains how these accounts work, how they differ, and, most importantly, how women can use them together over time to build long-term wealth. You don’t need to perfect every tax detail to make progress. The key is understanding your options and using them with purpose.

Why Retirement Accounts Matter for Long-Term Wealth

Retirement accounts are powerful savings tools with advantages like tax benefits and compounding interest that help money grow over time. Some accounts allow you to contribute pre-tax and pay taxes later, while others use after-tax contributions in exchange for tax-free withdrawals in retirement.

Retirement investing also differs from taxable investing in important ways, including limits on annual contributions and restrictions on when you can withdraw funds. The goal isn’t short-term access, it’s long-term growth and future income.

The most important decision in retirement investing isn’t which account you choose; it’s the decision to start. Even modest contributions can grow significantly over decades, especially when combined with employer matches and reinvested dividends.

Women live about 5.3 years longer than men, with an average life expectancy of 81.1 years, according to the Centers for Disease Control and Prevention. Many also retire earlier, meaning retirement savings often need to last longer.

401(k)s: The First Stop for Many Women

A 401(k) is an employer-sponsored retirement plan, and for many women, it’s the easiest place to begin retirement investing. Contributions to 401(k)s are frequently deducted automatically from your paycheck, making it easier to stick to the plan.

In addition to the ease of investing, 401(k)s may also offer an employer match, where your employer contributes up to a certain percentage of your salary to match your investment. Many people think there is no such thing as free money, but an employer match may be as close as it gets. When resources are limited, contributing up to the threshold for a full employer match should be a top priority.

Money that you contribute to your 401(k) is yours even if you change jobs, but changing jobs gives you additional options. You can generally leave your 401(k) with your former employer, roll it into your new employer’s plan, or roll it into an Individual Retirement Account or IRA. Each of these options has pros and cons, but the key to long-term success is to stay invested and let your money continue to work for you, rather than cash out, which can trigger taxes and penalties.

IRAs Explained: Traditional vs. Roth

Individual Retirement Accounts (IRAs) are accounts you open on your own, outside of an employer plan. There are two types of IRAs: Traditional and Roth.

The primary difference between the two is taxation. Contributions to Traditional IRAs may be tax-deductible today, but withdrawals are taxed as income in retirement. Contributions to Roth IRAs are made with after-tax dollars, but qualified withdrawals later are tax-free.

Eligibility and contribution limits depend on income and access to workplace plans. IRAs are a retirement savings tool worth using because they often offer more investment options than employer plans and provide savings stability during job transitions, freelance work, or career pauses. 

When Roth Accounts Can Be Especially Useful

The term Roth refers to how a retirement account is taxed, not the account type itself. Both employer-sponsored plans, such as 401(k)s, and individual retirement accounts can have a Roth designation, meaning contributions are made with after-tax dollars in exchange for tax-free growth and qualified withdrawals in retirement.

Roth accounts, whether a Roth IRA or a Roth 401(k), are good choices for retirement savings, particularly during lower-income years like early career stages, part-time work, or career pauses. By paying taxes upfront during lower-income years and tax-free income from qualified withdrawals later, Roth accounts can offer flexibility and potential tax savings over the long term, particularly if future tax rates or income levels rise.

How to Use These Accounts Together

You don’t have to commit to one retirement strategy forever. Many women benefit from using different accounts at different stages of life, adjusting contributions as income and priorities change.

Here are some practical priorities to consider when layering and adjusting retirement accounts over time:

• Start by contributing to your workplace’s 401(k) at least enough to earn the full employer match, so you’re not leaving free money on the table.
• Add in a Traditional or Roth IRA, depending on income and tax considerations, for additional tax-advantaged retirement savings.
• Use a mix of tax-deferred and tax-free retirement accounts, such as a traditional 401(k) with a Roth IRA, to benefit from tax advantages today and in the future.
• Adjust contributions as income and circumstances change.

For example, a woman might contribute to her 401(k) while working full-time to earn the employer match. If her income drops, she could save more in a Roth IRA, then adjust her contributions again when her income goes up. Retirement planning changes as your career, income, and priorities do.

Common Retirement Account Mistakes to Avoid

These mistakes are easy to make and easy to avoid, once you’re aware of them.

• Not taking advantage of employer-match: Most employers will match at least part of your 401(k) contributions, depending on how much you contribute. If you’re not taking advantage of this match, you’re leaving free money on the table.
• Investing in cash: Another mistake is putting money into a retirement account but leaving it in cash instead of investing, which can hold back your long-term growth.
• Striving for perfection: Some women wait to invest because they worry about picking the wrong account or investment. In reality, starting early, even if it’s not perfect, is usually more important than making the perfect choice right away, since time in the market has a big impact on long-term results.
• Forgetting to review: Retirement accounts are not something you can just set and forget. You don’t need to check them every day, but it’s helpful to review your contributions, investments, and balances from time to time. Annual reviews are important, but revisiting your retirement accounts when your job or income changes is smart too. This way, your plan can keep up with updates in your income, goals, and life.

The Bottom Line

Retirement savings accounts such as IRAs, 401(k)s, and Roth accounts are tools, not tests. You don’t need all the answers to build wealth that supports the retirement you want. By understanding how different accounts work, contributing enough to earn any available employer match, starting early, and using a mix of accounts to your advantage, you can create a flexible, tax-efficient strategy that adapts to career changes, income shifts, and longer life expectancies. In the end, consistency, not perfection, is what drives long-term success.