It’s always a good idea to put money in both an IRA and an employer-matched 401(k) for your retirement. The IRS allows you a maximum contribution of $5,500 yearly, and if you’re over 50, you are allowed to contribute an additional $1,000. Keep in mind that if you have both a Roth and a traditional IRA, your total contributions cannot exceed these maximums. With a 401(k), you’re allowed a maximum contribution of $18,000 a year and have the opportunity of contributing an additional $6,000 if you’re over 50.

What if you can’t afford to contribute to both your IRA and 401(k) but want to make the best of your situation? Here’s a strategy for you!

Never Leave Free Money on the Table

You should never walk away from free (and legal!) money. If you have an employer-matched 401(k) and are not taking advantage of your employer’s matching, that is exactly what you’re doing. Your retirement savings strategy should be to fund your 401(k) first to achieve the maximum match from your employer. After that, switch to putting money into your IRA(s). A traditional IRA will give you an upfront tax deduction, while a Roth IRA will give you a tax break when you withdraw money after you retire. After maxing out your IRAs, go back to investing in your 401(k).

No Match? No Problem!

The positive side of an IRA is the flexibility it offers. If your employer doesn’t offer a match with your 401(k), start by maxing out your IRAs. Once that’s accomplished, put your money into your 401(k) to take advantage of its pre-tax benefit.