How to Plan for Retirement in 2025: IRA Options, Rates, and Strategies

Saving for retirement can feel like a big task, whether you’re just starting your career or counting down the years to leaving work behind. The good news? An Individual Retirement Account (IRA) can help you grow your savings with tax advantages, setting you up for the future you want.

This guide walks you through the essentials: the types of IRAs, how IRA rates work, strategies for building wealth, and practical retirement planning tips. We’ll also share how Member One’s offerings can support your journey to one of the best IRA accounts for your goals.

Types of IRAs: Finding the Right Fit for Your Future

IRAs come in a few different forms, each designed to support different savings strategies. Here’s what you need to know to choose the right one for your retirement goals.

Traditional IRA

With a Traditional IRA, you contribute pre-tax dollars—potentially lowering your taxable income today. Your savings grow tax-deferred, and you’ll pay taxes when you withdraw the money in retirement, ideally when you’re in a lower tax bracket.

For 2025, the annual contribution limit is $6,500 (or $7,500 if you’re 50 or older). Withdrawals before age 59½ usually face a 10% penalty, though there are exceptions for first-time homebuyers, qualified education expenses, and certain medical costs.

This option is often a good fit if you expect your income—and your tax rate—to be lower in retirement.

Roth IRA

Roth IRAs are funded with after-tax dollars. You won’t get a tax break today, but qualified withdrawals in retirement—including all earnings—are completely tax-free, as long as the account has been open at least five years and you’re over 59½.

Contribution limits match those of Traditional IRAs, but Roths have income restrictions. In 2025, single filers earning more than $153,000 or joint filers over $228,000 can’t contribute directly.

If you’re early in your career, expect your income to grow, or want more flexibility in retirement, a Roth IRA may be the right choice.

SEP IRA

A Simplified Employee Pension (SEP) IRA is built for self-employed individuals and small business owners. It allows you to contribute up to 25% of your net self-employment income—or $66,000 in 2025, whichever is less. Contributions are tax-deductible, and withdrawals are taxed like a Traditional IRA.

This is a powerful option if you're self-employed and want to set aside more than the standard IRA limits allow.

You can contribute to more than one type of IRA in a given year, as long as your total contributions stay within the IRS limit for your age. Traditional and Roth IRAs share that annual cap, while SEP IRAs have their own. If you’re weighing multiple options or wondering how they might work together, check in with a tax advisor to make the most of your strategy.

Typical IRA Rates of Return

The returns you earn from an IRA depend entirely on how the money inside the account is invested. Stocks, bonds, mutual funds, and fixed-rate products all offer different levels of growth and risk—and understanding how they behave can help you shape a strategy that fits your goals.

Over the long term, stocks have averaged around 10% annually. For reference, the S&P 500 gained 12.37% from 2013 to 2023. But markets can be unpredictable: 2022 saw a drop of nearly 20%, while the following year brought a 24% rebound. That kind of volatility is normal—and it’s one reason why many advisors suggest diversifying your IRA across multiple types of investments.

Here’s a quick overview of common investment vehicles and their typical performance:

Stocks

Potential for strong growth, but with more ups and downs. An S&P 500 index fund might average 8–10% per year, but individual stocks can swing sharply in either direction. These are often best suited for long-term investors who can ride out market fluctuations.

Bonds

Lower risk, steadier returns. Bond funds—like municipal or Treasury bond portfolios—typically yield around 3–4%. If you’re nearing retirement or looking for more predictability, bonds may play a larger role in your portfolio.

Mutual Funds and ETFs

These offer built-in diversification by bundling stocks, bonds, or both. A balanced fund might return 6–8% annually and can provide a more stable growth path for mid-career investors or those easing into retirement.

IRA Certificates

Fixed-rate products with no market exposure. Member One offers IRA Certificates with competitive annual percentage yields (APYs) for terms ranging from one to seven years - for our current rates, click here. These are useful when you want guaranteed returns for a set period.

IRA Savings Accounts

These prioritize liquidity over growth. Member One’s IRA Savings offers 0.10% APY with a $50 minimum balance—a good option for short-term savings or a temporary location for funds while you plan a longer-term investment.

How to Choose the Right Investment Mix

The right mix of these options depends on more than just your age. Yes, younger investors often take on more risk to pursue growth, while older investors may shift toward safer, more stable assets—but that’s only part of the picture.

You’ll also want to consider how far you are from retirement, how much you’ve already saved, and how comfortable you are with market ups and downs. A 40-year-old with a late start might take a more aggressive approach than a 30-year-old who’s been saving steadily for years. The key is balancing your timeline, your risk tolerance, and your long-term financial goals.

Once you understand how different types of investments typically perform, the next step is building a strategy that puts those tools to work—one that helps your savings grow steadily and sustainably over time.

Investing for Retirement: Strategies for Long-Term Growth

Once you’ve chosen how to allocate your IRA funds, the next step is to follow through with a strategy that can withstand market swings and keep you moving toward your goal. These long-term principles can help you stay on track through all phases of your retirement journey.

Start Early to Take Advantage of Compound Growth

The earlier you begin, the more time your money has to grow. For example, if you invest $5,000 a year starting at age 25 with a 7% average return, you’ll have over $400,000 by age 55. Wait just 10 years to start, and that total drops to around $150,000. Even small, consistent contributions—like $50 a month from age 30—can add up to more than $75,000 by age 60.

Diversify to Manage Risk

Spreading your investments across asset types helps protect against market swings. If you're in your 40s, you might choose a mix like 60% stocks, 30% bonds, and 10% fixed-rate products such as an IRA Certificate. That way, if the stock market dips, your bond and certificate holdings help keep your overall portfolio steady.

Adjust Your Approach as Retirement Gets Closer

As your timeline shortens, you’ll likely want to reduce exposure to risk. In your 20s or 30s, a stock-heavy portfolio can support long-term growth. But by your 50s or early 60s, shifting more into bonds and fixed-rate options can help preserve what you’ve built. Rebalancing once a year—by adjusting allocations back to your original plan—can help you stay on track.

Use Dollar-Cost Averaging to Stay Consistent

Rather than trying to time the market, invest a set amount on a regular schedule. For instance, putting in $500 every month means you'll buy more shares when prices dip and fewer when they rise. Over time, this helps average out your cost and reduces the impact of short-term volatility.

Stick with the Plan

Markets don’t move in straight lines. There will be downturns—some sharp, some sustained. But long-term investors who stay committed tend to come out ahead. A well-structured portfolio, built to reflect your risk tolerance and goals, is designed to weather those ups and downs.

Retirement Planning Tips: Practical Steps to Secure Your Future

A clear plan can make retirement feel less abstract and more achievable. The sooner you define your goals and take action, the more control you’ll have over your financial future.

Start With a Vision

Think about what retirement looks like for you. Do you want to travel, downsize, support family, or simply enjoy more free time? If you estimate needing $50,000 a year for 20 years, you’re looking at a $1 million goal—especially if Social Security is expected to cover only a portion of that. Defining what you want helps you understand what it will take to get there.

Estimate What You’ll Need to Save

Use Member One’s online calculators or a simple benchmark: multiply your desired annual income by 25. If you’ll need $40,000 per year, aim for a nest egg of $1 million. Don’t forget to factor in healthcare costs, which average $315,000 for a retired couple according to Fidelity.

Save at Least 15% of Your Income

Financial professionals often recommend saving 15% of your income for retirement—including any employer match. For example, if you earn $60,000 and contribute 6% ($3,600), and your employer matches half of that ($1,800), you're putting away $5,400 annually. That match is part of your compensation—make sure you’re not leaving it on the table.

Max Out Tax-Advantaged Accounts

In 2025, you can contribute up to $6,500 to an IRA—or $7,500 if you're 50 or older. If you also have a 401(k), the combined total can go as high as $23,000 (or $30,500 if 50+). These accounts can offer powerful tax benefits, especially over time.

Automate Your Contributions

Setting up automatic monthly contributions to your IRA or retirement plan makes saving feel effortless. Even a modest amount becomes meaningful when it's consistent—and you’re less likely to skip or forget.

Revisit Your Plan Regularly

Your situation will change over time—new job, promotion, family, or market shifts. Check in on your progress once a year. If your income increases, bump up your savings. If the market drops, review your allocation. Planning is not a one-time event—it’s an ongoing habit.

Work With a Trusted Advisor

No two retirement plans are the same. Whether you’re deciding between a Roth or Traditional IRA—or figuring out how much to contribute each year—your strategy should reflect your income, your timeline, and the kind of retirement you want to build. If you’re unsure where to begin, having the right support can make all the difference.

Explore IRA Options With Member One

Once you’ve built your retirement plan, the next step is choosing the right tools to support it. Member One offers flexible, accessible IRA products to help you grow your savings with confidence.

IRA Certificates offer fixed returns with no market risk. Terms range from one to seven years - for current rates of return, click here. These are ideal if you want to lock in competitive rates while staying on a predictable savings schedule.

IRA Savings Accounts provide more flexibility. With just a $50 minimum to open and an APY of 0.10%, this option gives you room to start small, stay liquid, or set aside funds as you prepare for a longer-term investment.

There are no setup fees, and you’ll have access to digital tools to track your progress. Whether you’re rolling over a 401(k) or starting fresh, you can get personalized help online, by phone, or at any Member One branch.

Ready to put your plan into motion? Explore IRA options by clicking here or call 800.666.8811 to speak with someone who can help you take the next step.

This article is for educational purposes only. For personalized financial advice, it's best to speak with either a licensed tax advisor, financial advisor or an investment advisor. Contact our team today!