Typical American workers will have multiple retirement accounts by the end of their careers, and these can be 401(k)s or IRAs. While a 401(k) is an employer-sponsored plan, an IRA is set up by the individual. The biggest difference between the two is contribution limits. That is, an employee can contribute up to $18,000 to their 401(k) account (and up to $24,000 if 50 years old or older). The contribution limit on IRAs is $5,500 (and up to $6,500 if 50 years old or older).


On average, though, employees have an annual contribution of $3,300 (as stated by the U.S. Department of Labor), which means IRAs are a great option for many Americans.

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