If your employer does not offer a retirement plan, then consider making a contribution to a traditional individual retirement arrangement (IRA). This is easily set up through most banks, insurance companies, or other financial institutions.
Similar to the Health Savings Account mentioned earlier, in that, you can make a contribution to your IRA before the 2016 tax return due date (without extension) and lower the amount of income you will pay tax on for 2016 by the amount of your contribution. The current limits can be as high as $6,500 for an individual who will recognize a dollar-for-dollar reduction in taxable income. Married filers can each contribute up to $13,000 but should keep in mind they are subject to phase-out, or reduction of the deductible amount for joint incomes above $186,000. On the lower end of the income scale, the IRS also has a retirement savings tax credit. This tax credit can be as high as 50% of the contributions; that, in conjunction with the reduction of taxable income, is a potent incentive for IRA contributions.
If your employer offers a retirement plan at work, you are highly encouraged to contribute as much pre-tax income as possible, especially if your employer makes matching contributions (free money!). If you are the employer, or self-employed, there are several additional options available for retirement savings contributions. Speaking with tax experts is advised as there are enough options available to warrant a separate article.
Retirement Contributions