Life Stages Archives

Feb

2026

The Average 401(k) Balance by Age

By Rebecca Lake | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

Table of Contents

Average 401(k) Balance: Overview
Average 401(k) Balance: Under Age 25
Average 401(k) Balance: Ages 25-34
Average 401(k) Balance: Ages 35 to 44
Average 401(k) Balance: Ages 45 – 54
Average 401(k) Balance: Ages 55 to 64
Average 401(k) Balance: Ages 65 and Older
How Much Should I Have in My 401(k)?
Tips for Catching Up If You’re Behind

Key Points

• Establishing the habit of investing in a retirement plan early, even small amounts, may help you benefit from compounding returns.

• Aim to contribute enough to your 401(k) to get the full employer match, so you don’t leave money on the table.

• Automating contributions can make it easier to consistently build retirement funds over time.

• If you’re over 50, making catch-up contributions can boost your retirement savings.

• Paying attention to asset allocations, investment performance, and fees can help you make regular adjustments to target your goals.

What’s the Average 401(k) Balance?

The average 401(k) balance for all ages is $134,128, according to Vanguard’s How America Saves Report 2024. However, the average 401(k) balance by age of someone in their 20s is very different from the balance of someone in their 50s and 60s. That’s why it’s helpful to know how much you should have saved in your 401(k) at different ages.

Seeing what others are saving in their 20s, 30s, 40s, 50s, and beyond can be a useful way to gauge whether you’re on track with your own retirement plans and what else you can do to maximize this critical, tax-deferred form of savings.

Average and Median 401(k) Balance by Age Group

Pinning down the average 401(k) account balance can be challenging, as only a handful of sources collect information on retirement accounts, and they each have their own methods for doing so.

Vanguard is one of the largest 401(k) providers in the U.S., with nearly 5 million participants. For this review of the average and median 401(k) balance by age, we use data from Vanguard’s How America Saves Report 2024.

It’s important to look at both the average balance amounts, as well as the median amounts. Here’s why: Because there are people who save very little, as well as those who have built up very substantial balances, the average account balance only tells part of the story. Comparing the average amount with the median amount — the number in the middle of the savings curve — provides a reality check as to how other retirement savers in your age group may be doing.

Age Group	Average 401(k) Balance	Median 401(k) Balance
Under 25	$7,351	$2,816
25-34	$37,557	$14,933
35-44	$91,281	$35,537
45-54	$168,646	$60,763
55-64	$244,750	$87,571
65+	$272,588	$88,488

Source: Vanguard’s How America Saves Report 2024

Average 401(k) Balance for Ages 25 and Under

• Average 401(k) Balance: $7,351

• Median 401(k) Balance: $2,816

• Key Challenges for Savers: Because they are new to the workforce, this age group is likely to be making lower starting salaries than those who have been working for several years. They may not have the income to put towards a 401(k). In addition, debt often presents a big challenge for younger savers, many of whom may be paying down student loan debt, credit card debt, or both.

• Tips for Savers: While being debt-free is a priority, it’s also crucial to establish the habit of saving now — even if you’re not saving a lot. The point is to save steadily, whether that’s by contributing to your 401(k) or an investment account, and to automate your savings.

By starting early, even small contributions have the potential to grow over time because of the power of compounding returns.

Average 401(k) for Ages 25 to 34

• Average 401(k) Balance: $37,557

• Median 401(k) Balance: $14,933

• Key Challenges for Savers: At this stage, savers may still be repaying student loans, which can take a chunk of their paychecks. At the same time, they may also be making big — and expensive — life changes like getting married or starting a family.

• Tips for Savers: You’ve got a lot of competing financial responsibilities right now, but it’s vital to make saving for your future a priority. Contribute as much as you can to your 401(k). If possible, aim to contribute at least the amount needed to get your employer’s matching contribution, which is essentially free money. And when you get a raise or bonus at work, direct those extra funds into your 401(k) as well.

Average 401(k) for Ages 35 to 44

• Average 401(k) Balance: $91,281

• Median 401(k) Balance: $35,537

• Key Challenges for Savers: While your late 30s and early 40s may be a time when salaries range higher, it’s also typically a phase of life when there are many demands on your money. You might be buying a home, raising a family, or starting a business, and it could feel more important to focus on the ‘now’ rather than the future.

• Tips for Savers: Even if you can’t save much more at this stage than you could when you were in your early 30s, you still may be able to increase your savings rate a little. Many 401(k) plans offer the opportunity to automatically increase your contributions each year. If your plan has this feature, take advantage of it. A 1% or 2% increase in savings annually can add up over time. And because the money automatically goes directly into your 401(k), you won’t miss it.

Average 401(k) for Ages 45 to 54

• Average 401(k) Balance: $168,646

• Median 401(k) Balance: $60,763

• Key Challenges for Savers: These can be peak earning years for some individuals. However, at this stage of life, you may also be dealing with the expense of sending your kids to college and helping ailing parents financially.

• Tips for Savers: The good news is, that starting at age 50, the IRS allows you to start making catch-up contributions to your 401(k). For 2025, the regular contribution limit is $23,500, but individuals ages 50 and up can make an additional $7,500 in 401(k) catch-up contributions for a total of $31,000. For 2026, while those under age 50 can contribute up to $24,500, individuals who are 50 and up can contribute an additional $8,000 for a total of $32,500.

Under a new law that went into effect on January 1, 2026 as part of SECURE 2.0, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account, meaning they’ll pay taxes on catch-up contributions upfront, but can make qualified withdrawals tax-free in retirement.

While money may be tight because of family obligations, this may be the perfect moment — and the perfect incentive — to renew your commitment to retirement savings because you can save so much more.

If you max out your 401(k) contributions, you may also want to consider opening an IRA. An individual retirement account is another vehicle to help you save for your future, and depending on the type of IRA you choose, there are potential tax benefits you could take advantage of now or after you retire.

Average 401(k) for Ages 55 to 64

• Average 401(k) balance: $244,750

• Median 401(k) balance: $87,571

• Key Challenges for Savers: As retirement gets closer, this is the time to save even more for retirement than you have been. That said, you may still be paying off your children’s college debt and your mortgage, which can make it tougher to allocate money for your future.

• Tips for Savers: In your early 60s, it may be tempting to consider dipping into Social Security. At age 62, you can begin claiming Social Security retirement benefits to supplement the money in your 401(k). But starting at 62 gives you a lower monthly payout for the rest of your life. Waiting until the full retirement age, which is 66 or 67 for most people, will allow you to collect a benefit that’s approximately 30% higher than what you’d get at 62. And if you can hold off until age 70 to take Social Security, that can increase your benefit as much as 32% versus taking it at 66.

In 2025 and 2026, those in their early 60s can also take advantage of an additional catch-up to their 401(k). Specifically, those aged 60 to 63 can contribute an additional $11,250 in catch-up contributions (instead of $7,500) to their 401(k) in 2025, and an additional $11,250 in 2026 (instead of $8,000), thanks to SECURE 2.0. Again, because of the new law regarding catch-up contributions, individuals aged 50 and older with FICA wages exceeding $150,000 in 2025 are required to put their catch-up contributions into a Roth 401(k) account.

Average 401(k) for Ages 65 and Older

• Average 401(k) balance: $272,588

• Median 401(k) balance: $88,488

• Key Challenges for Savers: It’s critical to make sure that your savings and investments will last over the course of your retirement, however long that might be. You may be underestimating how much you’ll need. For instance, healthcare costs can rise in retirement since medical problems can become more serious as you get older.

• Tips for Savers: Draw up a retirement budget to determine how much you might need to live on. Be sure to include healthcare, housing, and entertainment and travel. In addition, consider saving money by downsizing to a smaller, less costly home, and continue working full-time or part-time to supplement your retirement savings. And finally, keep regularly saving in retirement accounts such as a traditional or Roth IRA, if you can.

Recommended: When Can I Retire?

How Much Should I Have in My 401(k)?

The amount you should have in your 401(k) depends on a number of factors, including your age, income, financial obligations, and other investment accounts you might hold. According to Fidelity’s research on how much is needed to retire , an individual should aim to save about 15% of their income a year (including an employer match) starting at age 25.

To get a sense of how this looks at various ages, the chart below shows the average 401(k) balance by age, according to Vanguard’s research, as well as Fidelity’s rule of thumb for what your target 401(k) balance should roughly be at that age. Note that these are just guidelines, but they can give you a goal to work toward.

Age Group	Average 401(k) Balance*	Approximate Target 401(k) Balance**
Under 25	$7,351	Less than 1x your salary
25-34	$37,557	1x your salary by age 30
35-44	$91,281	2x your salary by age 35 3x your salary by age 40
45-54	$168,646	4x your salary by age 45 6x your salary by age 50
55-64	$244,750	7x your salary by 55 8x your salary by 60
65+	$272,588	10x your salary by age 67

*Source: Vanguard’s How America Saves Report 2024
**Source: Fidelity Viewpoints: How Much Do I Need to Retire?

Tips for Catching Up If You’re Behind

If your savings aren’t where they should be for your stage of life, take a breath — there are ways to catch up. These seven strategies can help you build your nest egg.

1. Automate your savings.

Automating your 401(k) contributions ensures that the money will go directly from your paycheck into your 401(k). You may also be able to have your contribution amount automatically increased every year, which can help accelerate your savings. Check with your employer to see if this is an option with your 401(k) plan.

2. Maximize 401(k) contributions.

The more you contribute to your 401(k), the more growth you can potentially see. At the very least, aim to contribute enough to qualify for the full employer matching contribution if your company offers one.

3. Make catch-up contributions if you’re eligible.

As mentioned, once you turn age 50, you can contribute even more money to your 401(k). If you can max out the regular contributions each year, making additional catch-up contributions to your 401(k) may help you grow your account balance faster.

4. Consider opening an IRA.

If you’ve maxed out all your 401(k) contributions, you could open a traditional or Roth IRA to help save even more for retirement. For 2025, those under age 50 can contribute up to $7,000 to an IRA or up to $8,000 if they’re 50 and older. For 2026, they can contribute up to $7,500 to an IRA or up to $8,600 if they’re 50 or older.

5. Make sure you have the right asset allocations.

The younger you are, the more time you have to recover from market downturns, so you may choose to be a little more aggressive with your investments. On the other hand, if you have a low risk capacity, you may opt for more conservative investments.

Either way, you want to save and invest your money wisely. Consider using a mix of investment vehicles, such as stocks, bonds, exchange-traded funds (ETFs), and mutual funds, to help diversify your portfolio. Just be aware that investing always involves some risk.

6. Pay Attention to Fees.

Fees can erode your investment returns over time and ultimately reduce the size of your nest egg. As you choose investments for your 401(k), consider the cost of different funds. Specifically, look at the expense ratio for any mutual funds or ETFs offered by the plan. This reflects the cost of owning the fund annually, expressed as a percentage. The higher this percentage, the more you’ll pay to own the fund.

7. Conduct an Annual Financial Checkup.

It can be helpful to check in with your goals periodically to see how you’re doing. For example, you might plan an annual 401(k) checkup at year’s end to review how your investments have performed, what you contributed to the plan, and how much you’ve paid in fees. This can help you make smarter investment decisions for the upcoming year.

The Takeaway

The average and median 401(k) balances and the target amounts noted above reflect some important realities for different age groups. Some people can save more, others less — and it’s crucial to understand that many factors play into those account balances. It’s not simply a matter of how much money you have, but also the choices you make.

For instance, starting early and saving regularly can help your money grow. Contributing as much as possible to your 401(k) and getting an employer match are also smart strategies to pursue, if you’re able to. And opening an IRA or an investment account are other potential ways to help you save for the future.

With forethought and planning, you can put, and keep, your retirement goals on track.

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FAQ

What is a good 401(k) balance?

A good 401(k) balance is different for everyone and depends on their age, specific financial situation, and goals. The general rule of thumb is to have 401(k) savings that’s equivalent to your salary by age 30, three times your salary by age 40, six times your salary by age 50, 8 times your salary by age 60, and 10 times your salary by age 67.

How much do most people retire with?

According to the Federal Reserve’s most recent Survey of Consumer Finances, the average 401(k)/IRA account balance for adults ages 55 to 64 was $204,000. Keep in mind, however, that when it comes to savings, one rule of thumb, according to Fidelity, is for an individual to have 8 times their salary saved by age 60 and 10 times their salary saved by age 67.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/kate_sept2004

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Feb

2026

The Ultimate Guide to Investing for Retirement at Age 60

By Michael Flannelly | Growing Wealth, invest, Investing | Comments Off

Retirement is a milestone that many people look forward to with great anticipation. While the freedom of having more time to spend with loved ones, pursue hobbies, or travel is certainly something to be celebrated, it is also important to plan, save, and invest so this future can be a reality.

It’s never too late to start saving and investing for these future goals, even if you’re nearing 60. And if you’ve been saving for years, it’s still smart to continue to invest for retirement when you reach 60. However, your investment strategies may need to change as you near the end of your working years. In this guide, we’ll explore key factors to consider when investing for retirement at age 60, as well as some low-risk investment options that may be suitable for those nearing retirement.

Investing for Retirement at 60

As you approach 60, retirement may be just around the corner. Maybe you’ve been saving for retirement your entire career. Or perhaps you started saving late and need to grow your nest egg quickly for your golden years. No matter the case, as retirement nears, you may wonder what to do to ensure financial stability.

Investing for retirement is critical to help you reach a comfortable financial position. But planning for retirement at age 60 may seem overwhelming. After all, there are several investment accounts you could open or continue to invest in, not to mention the various types of investments you could have in those accounts. With a little bit of research and planning, you can put yourself on the path of living comfortably in retirement.

If you’re beginning your investment journey, it’s better to start immediately rather than putting it off because you’re overwhelmed by the prospect of failing to meet your financial goals. It’s better to save and invest in different types of retirement plans now rather than put it off and have nothing down the road.

Options for Investing for Retirement at Age 60

Investing for retirement at age 60 can be a confusing and daunting process, particularly for those new to investing. But with some planning, retirees can find the best options for their needs. The following are some options to help you invest for retirement at age 60:

401(k)

A 401(k) is an employer-sponsored, tax-advantaged retirement savings plan that can be a valuable tool for someone who is 60 years old and looking to save for retirement. A 401(k) plan allows you to save for retirement on a tax-deferred basis, which means that your contributions could reduce your taxable income for the current year, and your investment earnings grow tax-free until you withdraw the funds in retirement.

If your employer offers a 401(k), it can be particularly advantageous for someone who is 60 years old as it provides several features that can help to maximize your retirement savings:

• Catch-up contributions: If you are 50 or older, you can make catch-up contributions to your 401(k) plan, which allows you to contribute more money to your account each year than younger participants. In 2025, the annual catch-up contribution is up to $7,500 more than the standard $23,500 contribution limit. In 2026, the annual catch-up contribution is up to $8,000 more than the standard $24,500 contribution limit. Also in 2025 and 2026, those aged 60 to 63 may contribute up to an additional $11,250 (instead of $7,500 in 2025 ans $8,000 in 2026), thanks to SECURE 2.0.

Under a new law regarding catch-up contributions that went into effect on January 1, 2026 (as part of SECURE 2.0), individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. With Roth accounts, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

• Employer matching contributions: Many 401(k) plans offer employer matching contributions, which can help to boost your retirement savings. Maxing out your employer match can be an effective way of increasing savings.

• Several investment options: A 401(k) plan typically offers a range of investment options, including mutual funds, exchange-traded funds (ETFs), and individual stocks and bonds. These investment options allow you to diversify your portfolio and manage risk.

• Loan options: Some 401(k) plans allow you to borrow from your account, which can be helpful in times of financial need.

IRA

An individual retirement account (IRA) is a tax-advantaged investment account that provides a way to save for retirement outside of an employer-sponsored plan, such as a 401(k). An IRA can be an option for someone who is 60 years old and looking to save for retirement. There are two main types of IRAs: traditional and Roth.

For someone who is 60 years old, an IRA can offer a number of benefits in terms of retirement savings:

• Tax benefits: A traditional IRA provides tax-deferred growth on your contributions, meaning that you can deduct your contributions from your taxable income for the current year and pay taxes on the funds when you withdraw them in retirement. A Roth IRA provides tax-free growth on your contributions, meaning you can withdraw the funds in retirement without paying any taxes on the investment earnings.

• Catch-up contributions: Like a 401(k), you are eligible to make annual catch-up contributions to your IRA if you are 50 or older. For 2025, the annual catch-up contribution is $1,000 more than the standard $7,000 contribution limit. For 2026, the annual catch-up contribution is $1,100 more than the standard $7,500 contribution limit.

Recommended: What is an IRA?

Real Estate

Investing in real estate is another option to save for retirement. Real estate investments provide a source of passive income, which may help supplement your retirement savings and hedge against inflation. There are several ways that someone who is 60 years old can invest in real estate, including:

• Rental property: Investing in rental property can provide a steady stream of rental income, which can help to supplement your retirement savings.

• Real estate investment trusts (REITs): Some REITs own and manage income-producing properties. Investing in REITs can provide exposure to a diverse portfolio of real estate assets without the responsibility of managing the properties yourself.

Annuities

Annuities may be an attractive investment vehicle for someone saving for retirement. An annuity is an investment product that provides a guaranteed income stream in exchange for a lump sum payment or a series of payments. It’s important to note that there are several types of annuities, each with unique features and benefits.

An annuity can offer many benefits for retirement savings:

• Guaranteed income: An annuity provides a guaranteed stream of income, which can help to provide financial stability in retirement.

• Protection from market downturns: Certain types of annuities can provide protection from market downturns, which can help to mitigate the impact of stock market losses on your retirement savings.

Things to Consider When Investing for Retirement at Age 60

Regardless of your financial situation, you can continue or start to invest for retirement at age 60. However, before you start investing at age 60, you should consider the following:

Retirement Goals

You want to figure out your desired lifestyle that you’ll have during retirement and how much money you will need to support it. You may want to travel the world. Or you want to live a low-key life near your family. Depending on your retirement goals, you’ll have much different needs.

Figuring out your retirement goals will help you determine how much you need to save and invest and what types of investments may be most suitable for your needs.

Time Horizon

One of the most important things to consider when investing for retirement at age 60 is your time horizon. With only a few years remaining until retirement, it’s important to consider how much time you have to invest and how long your investments need to last. This may affect the types of investments you choose, as you’ll likely want to focus on more conservative options that have a lower risk of losing your initial capital.

Risk Tolerance

Your risk tolerance may change as you get closer to retirement. At age 60, you may be less willing to take on the risk of losing your initial investment, as you’ll want to ensure that your savings last throughout your retirement. With a risk-averse outlook, you may consider lower-risk investment options such as certificates of deposit (CDs), dividend-paying stocks, or bond funds made up of US Treasuries and high-grade corporate debt.

Current Savings

Another critical factor to consider when investing for retirement at age 60 is your current savings. The amount you have already saved will play a significant role in determining how much you can invest and how much you will need to save. It’s also important to consider whether you have any other sources of retirement income, such as a pension plan or Social Security.

Social Security

Social Security is an important source of retirement income and can help supplement your other investments. When you turn 62, you can start receiving Social Security benefits. However, your benefits may be reduced if you start taking them early. Therefore, you want a holistic view of how your Social Security benefits will fit into your retirement plan.

Health Care Expenses

Healthcare expenses can significantly impact retirement savings, as they can be one of the largest expenses for individuals during their retirement years. Thus, you should factor in the potential for the need to pay for health care in your retirement savings plans.

According to the Fidelity Retiree Health Care Cost Estimate, the average 65-year-old couple retiring in 2022 can expect to spend approximately $315,000 on healthcare expenses throughout their retirement. This amount can quickly eat into an individual’s retirement savings, leaving them with less money for other costs such as housing, food, and entertainment.

Taxes

Some investment options have different tax implications, and it’s important to consider how your investments will be taxed in retirement. For example, traditional IRAs and 401(k)s are tax-deferred, meaning that you won’t have to pay taxes on the money you invest until you withdraw it in retirement. On the other hand, Roth IRAs and 401(k)s are taxed upfront, so you won’t have to pay taxes on the money you withdraw in retirement.

Cost of Living

Inflation, or the rise of the cost of living, can erode the value of your investments over time, so you want to factor in how inflation may affect your savings in the future. This can include investing in assets that may appreciate in value, such as stocks, or in assets that generate income, such as bonds and rental property.

Recommended: How Does Inflation Affect Retirement?

Open an Online IRA With SoFi

People may think that by the time they turn 60, they should have enough money to retire and live comfortably. However, like anything in life, things sometimes work out differently than you planned. So if you don’t have the retirement nest egg you envisioned by the time you turned 60, it doesn’t mean you should avoid saving altogether. By assessing your current financial situation, selecting appropriate investments, and taking advantage of retirement plans, you can ensure a secure financial future even if you’re starting at 60.

If you’re ready to start investing for retirement, you can open an online retirement account with SoFi. SoFi offers Traditional, Roth, and SEP IRAs for investors looking to reach their financial goals for retirement. With a SoFi Invest® active IRA, you’ll be able to access a broad range of investment options, like buying and selling stocks, exchange-traded funds (ETFs), and fractional shares with no commission.

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FAQ

Are you able to invest for retirement at 60?

It is possible to invest for retirement at age 60. However, it is also important to consider other factors, such as your current savings, retirement goals, and overall financial situation, to determine if investing for retirement at 60 is your best course of action.

Can you open a retirement account for investments at age 60?

You can open retirement accounts for investments at age 60. Several options are available, such as a traditional IRA or a Roth IRA. Additionally, these accounts allow catch-up contributions for people aged 50 or over.

How much money does the average 60-year-old invest for retirement?

The average amount a 60-year-old has saved for retirement can vary greatly depending on several factors, such as their current financial situation, savings habits, and overall financial goals. According to a report by Vanguard, the average and median retirement savings balance for individuals between the ages of 55 and 64 in 2021 was $256,244 and $89,716, respectively.

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Feb

2026

Retirement Plans For the Self-Employed

By MP Dunleavey | invest, Investing, Life & Career, Preparing for Retirement | No Comments

Table of Contents

What Are Self-Employed Retirement Plans?
5 Types of Self-Employed Retirement Plans

If you’re an entrepreneur, consultant, or small business owner, you might be surprised to learn that the retirement plan options when you’re self-employed — like a SEP IRA or solo 401(k) — are very robust.

Not only do you have more options in terms of self-employed retirement plans than you might think, some of these plans come with higher contribution limits and greater tax benefits than traditional plans. That’s especially true since the passage of the SECURE 2.0 Act, which has favorably adjusted the rules of many retirement plans.

Key Points

• Self-employed individuals have many retirement plan options, including SEP IRAs and solo 401(k)s.

• These plans are similar to traditional ones, allowing long-term contributions and a range of investment selections, and may offer higher contribution limits and tax benefits.

• SEP IRAs are ideal for business owners with employees, offering simplified contributions that are tax-deductible.

• Solo 401(k) plans suit owner-only businesses, allowing substantial contributions when you’re both employer and employee.

• SIMPLE IRAs are designed for small businesses with fewer than 100 employees, enabling both employer and employee contributions.

• Thanks to SECURE 2.0, in 2025 and 2026, there are additional “super catch-up” contributions allowed for those aged 60 to 63 for some accounts, as well as other new provisions.

What Are Self-Employed Retirement Plans?

In some ways, self-employed retirement plans aren’t so different from regular retirement plans. You can set aside money now, select investments within the account, and continue to contribute and invest for the long term.

Similar to traditional retirement plans, there are two main categories most self-employed plans fall into:

• Tax-deferred retirement accounts (such as traditional, SEP, or SIMPLE IRAs and solo 401(k) plans). The amount you can save varies by the type of account. The money you set aside is deductible, and you don’t pay tax on that portion of your income. You do pay taxes on the funds you withdraw in retirement.

• After-tax retirement accounts (typically designated as Roth IRAs or Roth 401(k) accounts). Here you can also save up to the prescribed annual limit, but the money you save is after-tax income and cannot be deducted. That said, withdrawals in retirement are tax free.

A note about Roth eligibility: Roth IRAs come with income limits. If your income is higher than the prescribed limit, you may not be eligible. Roth 401(k) plans do not come with income restrictions. Details below.

Understanding Beneficiary Rules for Self-Employed Plans

The rules that apply to inherited retirement accounts are extremely complicated. If you’re the beneficiary of an IRA, solo 401(k) or other retirement account, you may want to consult a professional as terms vary widely, and penalties can apply.

Administrative Factors to Consider

When selecting a self-employed retirement plan, it’s important to weigh the set up, administrative, and IRS filing rules. Some plans are easier to establish and maintain than others.

Given that running a plan can add to your overall time and personnel costs, it’s important to do a cost-benefit analysis when choosing a retirement plan when you’re a freelancer, consultant, or small business owner.

5 Types of Self-Employed Retirement Plans

The IRS outlines a number of retirement plans for those who are freelance, self-employed, or who run their own businesses. Here are the basics.

1. Traditional and Roth IRAs

What they are: One of the most popular types of retirement plans is an IRA — or Individual Retirement Arrangement.

As noted above, there are traditional IRAs, which are tax deferred, as well as Roth IRAs, which are after-tax accounts.

Suited for: While anyone with earned income can open a traditional or Roth IRA, these accounts can also be used specifically as self-employed retirement plans. They are simple to set up; and most financial institutions offer IRAs.

That said, IRAs have the lowest contribution limits of any self-employed plans, and may be better suited to those who are starting out, or who have a side hustle, and can’t contribute large amounts to a retirement account.

Contribution limits. There is no age limit for contributing to a traditional or Roth IRA, but there are contribution limits (and for Roth IRAs there are income limits; see below).

For tax year 2025, the annual contribution limit for traditional and Roth IRAs is $7,000. These IRAs allow for a catch-up contribution of up to $1,000 per year if you’re 50 or older, for a total annual limit of $8,000.

For tax year 2026, the annual contribution limit for traditional and Roth IRAs is $7,500, while those 50 and older can make an additional catch-up contribution of up to $1,100, for a total annual limit of $8,600.

Note that your total annual combined contributions across all your IRA accounts cannot exceed those limits. So if you’re 35 and contribute $3,000 to a Roth IRA for 2025, you cannot contribute more than $4,000 to a traditional IRA in the same year, for a maximum total annual contribution of $7,000.

Remember: You have until tax day in April of the following year to contribute to an IRA. For example, you can contribute to a traditional or a Roth IRA for tax year 2025 up until April 15, 2026.

Income limits: There are no income limits for contributing to a traditional IRA, but Roth IRAs do come with income restrictions.

• In 2025, the limit for single filers is up to $150,000 to make a full contribution. Those with incomes from $150,000 to $165,000 can contribute a reduced amount. Single individuals whose income is $165,000 or higher cannot contribute to a Roth IRA.

• For 2026 limits for single filers are: up to $153,000; those earning $153,000 or more but less than $168,000 can contribute a reduced amount. If their income is $168,000 or higher, they cannot contribute to a Roth IRA.

• For 2025, the income limit if you’re married, filing jointly, is up to $236,000 to make a full contribution. Those with incomes from $236,000 to $246,000 can contribute a reduced amount. If their income is $246,000 or higher, they cannot contribute to Roth.

• For 2026, individuals who are married and file taxes jointly have an income limit up to $242,000 to make a full contribution to a Roth, and $242,000 to $252,000 to contribute a reduced amount. If their income is $252,000 or higher, they cannot contribute to a Roth.

Tax benefits: The main difference between a traditional vs. Roth IRA is the tax treatment of the money you save.

• With a traditional IRA, the contributions you make are tax-deductible when you make them (unless you’re covered by a retirement plan at work, in which case conditions apply). Withdrawals are taxed at ordinary income rates.

• With a Roth IRA, there are no tax breaks for your contributions, but qualified withdrawals are tax free.

Withdrawal rules: You owe ordinary income tax on withdrawals from a traditional IRA after age 59 ½. You may owe a 10% penalty on early withdrawals, i.e., before age 59 ½. There are exceptions to this rule for medical and educational expenses, as well as other conditions, so be sure to check with a professional or on IRS.gov.

The rules and restrictions for taking withdrawals from a Roth are more complex. Although your contributions to a Roth IRA (i.e., your principal) can be withdrawn at any time, investment earnings on those contributions can only be withdrawn tax-free and without penalty once the investor reaches the age of 59½ — and as long as the account has been open for at least five years (a.k.a. the 5-year rule).

Required Minimum Distributions (RMDs): You are required to take RMDs from a traditional IRA starting at age 73. You are not required to take minimum distributions from a Roth IRA account. RMD rules can be complicated, so you may want to consult a professional to avoid making a mistake and potentially owing a penalty.

2. Solo 401(k)

What it is: A solo 401(k) is a self-employed retirement plan that the IRS also refers to as a one-participant 401(k) plan. It works a bit like a regular employer-backed 401(k), except that in this instance you’re the employer and the employee. There are contribution rules for each role, but this dual structure enables freelancers and solo business owners to save more than a standard 401(k) would allow.

Suited for: A solo 401(k) covers a business owner who has no employees, or employs only their spouse.

Contribution limits:

• As the employee: For 2025, you can contribute up to $23,500 or 100% of compensation (whichever is less), with an additional $7,500 in catch-up contributions allowed if you’re over 50, for a total of $31,000.

• For 2026, you can contribute up to $24,500, or 100% of compensation (whichever is less), with an additional $8,000 in catch-up contributions allowed if you’re over 50, for a total of $32,500.

• As the employer: You can contribute up to 25% of the employee’s net earnings, with separate rules for single-member LLCs or sole proprietors.

For 2025, total contributions cannot exceed a total of $70,000, or $77,500 if you’re 50 and over. For 2026, it’s $72,000 or $80,000 with the $8,000 catch-up provision.

• Super catch-up contribution rules: For tax years 2025 and 2026, those aged 60 to 63 only can contribute up to an additional $11,250, instead of the standard $7,500, or $81,250 total for 2025, and instead of the standard $8,000, for a 2026 total of $83,250.

An important note: Under a new law that went into effect on January 1, 2026 (as part of SECURE 2.0), individuals aged 50 and older with FICA wages exceeding $150,000 in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. Because of the way Roth accounts work, these individuals will pay taxes on their catch-up contributions upfront, but can make eligible withdrawals tax-free in retirement.

You cannot use a solo 401(k) if you have any employees, though you can hire your spouse so they can also contribute to the plan (and you can match their contributions as the employer), further reducing your taxable income.

Note that 401(k) contribution limits are per person, not per plan (similar to IRA rules), so if either you or your spouse are enrolled in another 401(k) plan, then the $70,000 employer + employee limit per person for 2025 ($72,000 for 2026) must take into account any contributions to that other 401(k) plan.

Income limits: There is a limit on the amount of compensation that’s allowed for use in determining your contributions. For tax year 2025 it’s $350,000; for 2026 it’s $360,000.

Tax benefits: A solo 401(k) has a similar tax setup as a traditional 401(k). Contributions can be deducted, thus reducing your taxable income and potentially the amount of tax you owe for the year you contribute. But you owe ordinary income tax on any withdrawals. (An exception to this is the new law regarding catch-up contrbutions for certain indivduals mentioned above.)

Withdrawal rules: You can take withdrawals from a solo 401(k) without penalty at age 59 ½ or older. Distributions may be allowed before that time in the case of certain “triggering events,” such as a disability (you can find a list of exceptions at IRS.gov), but you may owe a 10% penalty as well as income tax on the withdrawal.

Required Minimum Distributions (RMDs): You are required to take minimum distributions from a solo 401(k) starting at age 73. RMD rules can be complicated, so you may want to consult a professional to avoid making a mistake and potentially owing a penalty.

3. Simplified Employee Pension (or a SEP IRA)

What it is: A SEP IRA, or Simplified Employee Pension plan, is similar to a traditional IRA with a streamlined way for an employer (in this case, you) to make contributions to their own and their employees’ retirement savings. Note that when using a SEP IRA, the employer makes all contributions; employees do not contribute to the SEP.

Suited for: A key difference in a SEP IRA vs. other self-employment retirement plans is that it’s designed for those who run a business with employees. Employers have to contribute an equal percentage of salary for every employee (and you are counted as an employee). Again, employees may not contribute to the SEP IRA.

That means, as the employer, you can not contribute more to your retirement account than to your employees’ accounts (as a percentage, not in absolute dollars). On the plus side, it’s slightly simpler than a solo 401(k) to manage in terms of paperwork and annual reporting.

Contribution limits: For 2025, the SEP IRA rules and limits are as follows: you can contribute up to $70,000 ($72,000 for 2026) or 25% of an employee’s total compensation, whichever is less. Be sure to understand employee eligibility rules.

As the employer you can contribute up to 20% of your net compensation.

Note that SEP IRAs are flexible: Contribution amounts can vary each year, and you can skip a year.

Compensation limits: For tax year 2025 there is a $350,000 limit on the amount of compensation used to determine contributions; it’s $360,000 for 2026.

Tax benefits: Employers and employees can deduct contributions from their earnings, and withdrawals in retirement are taxed as income.

Withdrawal rules: You can take withdrawals from a SEP IRA without penalty at age 59 ½ or older. Distributions may be allowed before that time in the case of certain “triggering events,” such as a disability (you can find a list of exceptions at IRS.gov), but you may owe a 10% penalty as well as income tax on the withdrawal.

Required Minimum Distributions (RMDs): You are required to take minimum distributions from a SEP-IRA starting at age 73. RMD rules can be complicated, so you may want to consult a professional to avoid making a mistake and potentially owing a penalty.

New rules under SECURE 2.0: Starting in 2024, SEP IRA plans can now include a designated Roth option. But not all plan providers offer the Roth option at this time.

4. SIMPLE IRA

What it is: A SIMPLE IRA (which stands for Savings Incentive Match Plan for Employees) is similar to a SEP IRA except it’s designed for larger businesses. Unlike a SEP plan, individual employees can also contribute to their own retirement as salary deferrals out of their paycheck.

Suited for: Small businesses that typically employ 100 people or less.

Contribution limits for employers: A small business owner who sets up a SIMPLE plan has two options.

• Matching contributions. The employer can match employee contributions dollar for dollar, up to 3%.

• Fixed contributions. The employer can contribute a fixed 2% of compensation for each employee.

Employer contributions are required every year (unlike a SEP IRA plan), and similar to a SEP, contributions are based on a maximum compensation amount of $350,000 for 2025 and $360,000 for 2026.

Contribution limits for employees: Employees can contribute up to $16,500 to a SIMPLE plan for 2025, an additional $3,500 for those 50 and up; $17,000 for tax year 2026, and a $4,000 standard catch-up contribution.

2025 and 20206 Super catch-up contributions: For savers age 60 to 63 only, a SECURE 2.0 provision allows an extra contribution amount of $5,250 instead of the standard $3,500 catch-up contribution in 2025, and $5,250 instead of the standard $4,000 in 2026.

Tax benefits: Employers and employees can deduct contributions from their earnings, and withdrawals in retirement are taxed as income.

Withdrawal rules: Withdrawals are taxed as income. If you make an early withdrawal before the age of 59 ½ , you’ll likely incur a 10% penalty much like a regular 401(k); do so within the first two years of setting up the SIMPLE account and the penalty jumps to 25%.

New rules under SECURE 2.0: Starting in 2024, the federal law permits employers that provide a SIMPLE plan to make additional contributions on behalf of employees, as long as the amount doesn’t exceed 10% of compensation or $5,000, whichever is less. This amount will be indexed for inflation.

Also under these new rules, student loan payments that employees make can be treated as elective deferrals (contributions) for the purpose of the employer’s matching contributions.

In addition, SIMPLE plans can now include a designated Roth option, but not all plan providers offer the Roth option at this time.

5. Defined-Benefit Retirement Plan

Another retirement option you’ve probably heard about is the defined-benefit plan, or pension plan. Typically, a defined benefit plan pays out set annual benefits upon retirement, usually based on salary and years of service.

Typically pension plans have been set up and run by very large entities, such as corporations and federal and local governments. But it is possible for a self-employed individual to set up a DB plan.

These plans do allow for very high contributions, but the downside of trying to set up and run your own pension plan is the cost and hassle. Because a pension provides fixed income payments in retirement (i.e. the defined benefit), actuarial oversight is required annually.

The Takeaway

When you’re an entrepreneur, freelance, or otherwise self-employed, it may feel as if you’re out on your own, and your options are limited in terms of retirement plans. But in fact there are a number of options for individuals to consider, including various types of IRAs and a solo 401(k).

In some cases, these plans can be just as robust as employer-provided plans in terms of contribution limits and tax benefits, or even more so. Also, be aware that some plans now offer additional contribution amounts, thanks to SECURE 2.0.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Easily manage your retirement savings with a SoFi IRA.

🛈 While SoFi does not offer 401(k), SIMPLE IRA, or defined benefit plans at this time, we do offer a range of Individual Retirement Accounts (IRAs).

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

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Feb

2026

Why You Should Start Retirement Planning in Your 20s

By Austin Kilham | invest, Investing, Preparing for Retirement | Comments Off

Table of Contents

Main Reason to Start Saving for Retirement Early
How to Start Saving for Retirement in Your 20s
Types of Retirement Plans
Investing in Multiple Accounts
Retirement Plan Strategies
FAQ

When you’re in your 20s, retirement may be the last thing on your mind. But thinking about retirement now can help ensure your financial security in the future.

The longer you have to save for retirement, the better. Here’s why you should start retirement planning and investing in your 20s.

Key Points

• Starting retirement planning in their 20s allows individuals more time to build savings and benefit from compound returns.

• Compound returns may help early savers grow their money exponentially over a longer period.

• Calculate retirement savings goals and choose suitable savings vehicles, such as a 401(k), traditional IRA, or Roth IRA.

• Young investors with a long time horizon can generally afford a more aggressive portfolio than older investors.

• As retirement approaches, individuals can shift investments to less risky assets to help protect savings.

Main Reason to Start Saving for Retirement Early

When you start investing in your 20s, even if you begin with just a small amount, you have more time to build your nest egg. Typically, having a long time horizon means you have time to weather the ups and downs of the markets.

What’s more — and this is critical — the earlier you start investing, the more time you have to take advantage of the power of compound returns, which can help your investment grow over time.

Here’s how compound returns work: If the money you invest sees a return, and that profit is reinvested, you earn money not only on your original investment, but also on the returns. In other words, both your principal and your earnings could gain value over time. And the more time you have to invest, the more time your returns may compound.

Compound Returns Example

Imagine you are 25 with plans to retire at 65. That gives you 40 years to save up your nest egg. Now, let’s say you invest $5,000 in a mutual fund in your retirement account, and the fund has an annual rate of return of 5%. After a year you would have $5,250, including $250 of earnings (minus any investment or account fees). The following year, assuming the same rate of return, you would have $5,512.50, including $262.50 of earnings on the $5,250.

While there are no guarantees that the money would continue to gain 5% every year — investments involve risk and can lose money — historically, the average return of the S&P 500 is about 10% per year, or about 7% adjusted for inflation.

That might mean you earn 3% one year and 8% another year, and so on. But over time your principal would likely continue to grow, and the earnings on that principal would also grow. Imagine that playing out over 40 years and you can see why it’s important to start investing early for your retirement.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

How to Start Saving for Retirement in Your 20s

If you’re new to saving, starting a retirement fund requires a little bit of planning.

Step 1: Calculate how much you need to save

Set a goal. Consider your target retirement date and how long you’ll expect to be retired based on current life expectancy. What kind of lifestyle do you want to lead? And what do you expect your retirement expenses to be?

Step 2: Choose an investment vehicle

When it comes to where to put your savings, you have a number of options. For example, you can participate in your workplace 401(k) if you have one. You could also open an individual retirement account (IRA). Read more about both these options and how they work below.

Many retirement savers also opt to use an investing account, such as a taxable brokerage account.

Keep in mind that investments in stocks or other securities involve risk, but they may allow for the possibility of better returns. Young investors may be better positioned than older investors to take on additional risk, since they have time to recover after a market decline. However, the amount of risk you’re willing to take on is an important consideration and a personal choice.

Step 3: Start investing

Once you’ve opened an account, your investment strategy depends on age, goals, time horizon and risk tolerance. For example, the longer you have before you retire, the more money you might consider investing in riskier assets such as stock, since you’ll have longer to ride out any rocky period in the market. As retirement approaches, you may want to re-allocate more of your portfolio to typically less risky assets, such as bonds.

Types of Retirement Plans

If you’re interested in opening a tax-advantaged retirement plan, there are three main account types to consider: 401(k)s, traditional IRAs, and Roth IRAs.

401(k)

A 401(k) plan is an employer sponsored retirement account that you invest in through your workplace, if your employer offers it. You make contributions to 401(k)s with pre-tax funds (meaning contributions lower your taxable income), usually deducted from your paycheck. Your 401(k) will typically offer a relatively small menu of investments from which you can choose.

Employers may also contribute to your 401(k) and often offer matching contributions. Consider saving enough money to at least meet your employer’s match, which is essentially free money and an important part of your total compensation.

Some companies also offer a Roth 401(k), which uses after-tax paycheck deferrals.

Individuals under age 50 can contribute up to $23,500 in their 401(k) in 2025. Those age 50 and up can make an additional catch-up contribution of up to $7,500. In 2026, those under age 50 can contribute up to $24,500 in their 401(k), and those 50 and older can contribute an additional catch-up contribution of up to $8,000. And thanks to SECURE 2.0, in both 2025 and 2026, individuals ages 60 to 63 can make a higher catch-up contribution of up to $11,250 instead of $7,500 for 2025 and $8,000 for 2026.

Under a new law that went into effect on January 1, 2026 as part of SECURE 2.0, individuals aged 50 and older with FICA wages exceeding $150,000 in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account, meaning they’ll pay taxes on catch-up contributions upfront, but can make qualified withdrawals tax-free in retirement.

Money invested inside a 401(k) grows tax-deferred, and you’ll pay regular income tax on withdrawals that you make after age 59 ½. If you take out money before then, you could owe both income taxes and a 10% early withdrawal penalty.

You must begin making required minimum distributions (RMDs) from your account by age 73.

Traditional IRA

Traditional IRAs are not offered through employers. Anyone can open one as long as they have earned income. Depending on your income and access to other retirement savings accounts, you may be able to deduct contributions to a traditional IRA on your taxes.

As with 401(k) contributions, you will owe taxes on traditional IRA withdrawals after age 59 ½ and you may have to pay taxes and a penalty on early withdrawals.

In 2025, traditional IRA contribution limits are $7,000 a year or $8,000 for those age 50 and up. In 2026, contribution limits are $7,500 a year, or $8,600 for those age 50 and older. Compared to 401(k)s, IRAs typically offer individuals the ability to invest in a broader range of investments. These investments can then grow tax-deferred inside the account. Traditional IRAs are also subject to RMDs typically starting at age 73.

Roth IRA

Unlike 401(k)s and traditional IRAs, contributions to Roth IRAs are made with after-tax dollars. While they provide no immediate tax benefit, the money inside the account grows tax-free and it isn’t subject to income tax when withdrawals are made after age 59 ½.

You can also withdraw your contributions (but not the earnings) from a Roth at any time without a tax penalty as long as the Roth has been open for at least five tax years. The first tax year begins on January 1 of the year the first contribution was made and ends on the tax filing deadline of the next year, such as April 15. Any contribution made during that time counts as being made in the prior year.

So, for instance, if you made your first contribution on April 10, 2025, it counts as though it were made at the beginning of 2024. Therefore, your Roth would be considered open for five tax years in January 2029.

Roth IRAs are not subject to RMD rules. Contribution limits are the same as traditional IRAs.

Investing in Multiple Accounts

Individuals can have both a traditional and Roth IRA. But it’s important to note that the contribution limits apply to total contributions across both. So if you’re 25 and put $3,500 in a traditional IRA in 2025, you could only put up to $3,500 in your Roth in that same year.

You can also contribute to both a 401(k) and an IRA, however if you have access to a 401(k) at work (or your spouse does) you may not be able to deduct all or any of your IRA contributions, based on your modified adjusted gross income and tax filing status.

Retirement Plan Strategies

The investment strategy you choose will depend largely on three things: your goals, time horizon, and risk tolerance. These factors will help you determine your asset allocation — what types of assets you hold and in what proportion. Your retirement portfolio as a 20-something investor will likely look very different from a retirement portfolio of a 50-something investor.

For example, those with a high risk tolerance and long time horizon might hold a greater portion of stocks. This asset class is typically more volatile than bonds, but it also provides greater potential for growth.

Generally speaking, the shorter a person’s time horizon and the less risk tolerance they have, the greater proportion of bonds they may want to include in their portfolio. Here’s a look at some portfolio strategies and the asset allocation that might accompany them:

Sample Portfolio Style	Asset allocation
Aggressive	85% stocks, 15% bonds
Moderately Aggressive	80% stocks, 20% bonds
Moderate	60% stocks, 40% bonds
Moderately Conservative	30% stocks, 70% bonds
Conservative	20% stocks, 80% bonds

The Takeaway

Even if you don’t have a lot of room in your budget in your 20s to start investing, putting away as much as you can as early as you can, can go a long way toward helping you save for retirement. As you start to earn a bigger salary, you can increase the amount of money you save over time.

Help build your nest egg with a SoFi IRA.

FAQ

How much should a 25 year old have in a 401(k)?

There is no one specific amount a 25-year-old should have in their 401(k), but a common guideline suggests having about half your annual salary saved by age 25. So if you earn $30,000 a year, you’d aim to save approximately $15,000 by age 25, using this benchmark.

At what age should you have $50,000 saved?

You should aim to have saved $50,000 by about age 30. Here’s why: According to one rule of thumb, you should have the equivalent of one year’s salary saved by age 30. The average salary for individuals ages 25 to 34 is approximately $59,000, according to the latest data from the Bureau of Labor Statistics. So if you save $50,000 by around age 30, you are more or less in line with that target.

Is 26 too late to start saving for retirement?

No, age 26 is not too late to start saving for retirement. In fact, it’s never too late to start saving, but the sooner you start, the better. The earlier you start putting money away for retirement, the more time your money has to grow.

Photo credit: iStock/izusek

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Feb

2026

10 Tips on How to Pay for Nursing School

Nursing Student Loan Options: How to Pay for Nursing School

By Julia Califano | Going to College, Student Loans, student_loan | Comments Off

Table of Contents

1. Start With the FAFSA
2. Nursing School Scholarships
3. Grants for Nursing School
4. Federal Student Loans
5. Private Student Loans
6. Tuition Reimbursement Programs
7. Hospitals/Employers That Pay for Nursing School
8. Getting a Nursing Degree Abroad
9. Military Service
10. Nurse Corps Program
Deciding Which Route to Pursue
Private Student Loans From SoFi
FAQ

Becoming a nurse can be a rewarding career path, but the cost of nursing school is a major obstacle for many students. Between tuition, books, clinical fees, and living expenses, costs can quickly add up.

Fortunately, nursing students have access to a wide range of funding options. From federal aid and scholarships to employer-sponsored programs and military service, there are many ways to reduce out-of-pocket costs and long-term debt. Many students use a combination of funding sources rather than relying on just one. Understanding your options can help you reduce debt and make smarter financial decisions as you pursue your nursing degree.

Key Points

• Completing the FAFSA is the first step to determine eligibility for federal grants, loans, and other financial aid for nursing school.

• Scholarships and grants are the most desirable funding sources because they do not require repayment and can significantly reduce your costs.

• Federal student loans offer flexible repayment options and protections, but private student loans can fill in gaps when federal limits are met.

• Many health care employers and hospitals offer tuition reimbursement or assistance in exchange for a post-graduation work commitment.

• Programs like Public Service Loan Forgiveness and the Nurse Corps Loan Repayment Program offer ways for nurses to reduce or eliminate their student debt.

1. Start With the FAFSA

The Free Application for Federal Student Aid (FAFSA®) is a key first step for anyone planning to attend nursing school. Completing the FAFSA determines your eligibility for federal student aid, including grants, federal student loans, work-study programs, and some state-based aid. Many nursing schools also use the FAFSA to award their own institutional grants and scholarships.

If you are a dependent undergraduate, you’ll need to report your parent’s financial information. For federal student aid purposes, all graduate or professional students are automatically considered independent. Because of this independent status, you generally do not need to provide parental information on your graduate school FAFSA, even if you still live with them or they claim you as a dependent on their taxes.

You can list up to 20 schools on the online FAFSA form. Be sure to add any nursing colleges you’re considering, even if you haven’t applied or been accepted yet.

💡 Quick Tip: Fund your education with a competitive-rate, no-fees-required SoFi private student loan that covers up to 100% of school-certified costs.

2. Nursing School Scholarships

Scholarships are one of the most effective ways to pay for nursing school because they do not need to be repaid. There are thousands of scholarships available specifically for nursing students, offered by professional associations, health care organizations, nonprofit foundations, private companies, and educational institutions.

Some nursing scholarships reward academic excellence and leadership, while others assist students with financial need or focus on specific groups, such as veterans, first-generation students, and those seeking to work in underserved communities.

Scholarships can range anywhere from a few hundred to $10,000-plus. While individual awards may not cover all costs, applying for multiple scholarships can significantly reduce reliance on loans. Many students underestimate how much scholarship funding they can accumulate by consistently applying each year.

3. Grants for Nursing School

Grants are another valuable source of funding that does not require repayment. The most common federal grant is the Pell Grant, which is awarded to undergraduate students with exceptional financial need, with a lifetime eligibility limit equivalent to six years (12 semesters).

In addition to federal grants, many states offer grant programs designed to encourage students to enter high-demand fields like nursing. Some schools also provide institutional grants based on financial need or academic performance.

Unlike loans, grants are limited by available funding, making it important to submit the FAFSA as early as possible. Grants can be used to cover tuition, fees, books, and sometimes housing costs, and can help students minimize debt.

4. Federal Student Loans

When scholarships and grants aren’t enough to cover the full cost of nursing school, federal student loans are often the next option. These loans typically offer lower interest rates, more flexible repayment options, and better borrower protections than private loans. You apply for federal student loans by submitting the FAFSA.

Types of Federal Loans

There are three main types of federal student loans: Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.

Direct Subsidized Loans

Direct Subsidized Loans are available to undergraduate students with demonstrated financial need. The key benefit of subsidized loans is that the federal government pays the interest while you’re in school at least half-time, during the six-month grace period after you graduate, and during approved deferments. This can save nursing students a significant amount of money over time.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to undergraduate and graduate nursing students regardless of financial need. Interest begins accruing as soon as the loan is disbursed, but students can choose to defer payments while in school. These loans offer fixed interest rates and access to federal repayment programs.

Direct PLUS Loans

Direct PLUS Loans have traditionally been available to graduate and professional students, as well as to parents of dependent undergraduate students. However, as of July 2026, Grad PLUS loans will no longer be available to new borrowers. Students pursuing graduate nursing degrees — such as a Master of Science in Nursing (MSN) or Doctor of Nursing Practice (DNP) — will have access only to Direct Unsubsidized Loans.

Direct PLUS loans remain available to parents of undergraduate students. The maximum amount they can borrow is the cost of attendance at the nursing school you attend minus any financial aid you receive. However, PLUS loans have relatively high interest rates and fees compared to other federal loans.

💡 Quick Tip: Parents and sponsors with strong credit and income may find more-competitive rates on no-fees-required private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Student Loan Forgiveness for Nurses

One major advantage of federal student loans is access to loan forgiveness programs. Nurses working in nonprofit hospitals, government facilities, or public health organizations may qualify for Public Service Loan Forgiveness (PSLF). Under PSLF, remaining loan balances can be forgiven after 120 qualifying monthly payments (typically 10 years) while working for an eligible employer.

Some state and federal programs offer loan repayment assistance or forgiveness for nurses who work in high-need or underserved areas, making federal loans more attractive for those committed to public service. For example, the federal Nurse Corps Loan Repayment Program repays a significant portion of education loans for nurses in exchange for two years of service at a critical shortage facility or eligible nursing school (more on this program below).

Student Loan Payment Deferrals

Federal loans allow for payment deferrals while you’re enrolled in school at least half-time. After graduation, borrowers typically receive a six-month grace period before payments are due. In certain circumstances, such as economic hardship or further education, additional deferment may be available.

Income-Driven Repayment Plan for Nurses

Income-driven repayment (IDR) plans base your monthly loan payments on your income and household size rather than the total loan balance. After 20 to 30 years of qualifying payments, any remaining balance may be forgiven, depending on the plan.

Beginning in July 2026, new federal student loan borrowers will only have access to the Repayment Assistance Plan (RAP). RAP is designed to cap payments at an affordable percentage of income and provides forgiveness after 30 years of repayment. For nurses entering the workforce with high debt levels and modest salaries, IDR plans can make payments more manageable.

5. Private Student Loans

Private student loans can help fill funding gaps when federal aid does not fully cover nursing school costs. These loans are offered by banks, credit unions, and online lenders, and terms vary widely based on credit and income. You can find private undergraduate loans, as well as graduate student loans.

Private Student Loans vs Federal Student Loans

While federal student loans offer fixed interest rates and robust protections — such as income-driven repayment, deferment, and forgiveness — their annual and lifetime limits may not cover the full cost of nursing school.

In contrast, private loans can bridge these funding gaps by allowing students to borrow up to the total cost of attendance. However, private loan approval and rates depend heavily on creditworthiness and often require a cosigner to secure competitive terms. They also lack the flexible safety nets found in federal programs.

Choosing the Right Lender for Nursing School

If you decide to use private loans, it’s important to compare lenders carefully. Look at interest rates, repayment terms, borrower benefits, and customer reviews. Some lenders offer specialized rates, discounts, or specific loan products for students in health care professions. Taking time to shop around can help reduce the long-term cost of borrowing.

Recommended: Student Loan Payment Calculator

6. Tuition Reimbursement Programs

A tuition reimbursement program is an employer-provided benefit that allows students to receive partial or full reimbursement for education costs after completing coursework. These programs are often offered by health care employers and can significantly reduce nursing school expenses.

Reimbursement amounts and eligibility rules vary, but many programs require you to work for the employer while in school or commit to continued employment after graduation. While reimbursement may not cover upfront costs, it can ease the financial burden over time

7. Hospitals/Employers That Pay for Nursing School

Many hospitals and health care systems actively invest in educating future nurses to address staffing shortages and improve patient care. These employer-sponsored programs can cover a large portion — or even all — of nursing school tuition up front or help employees repay their nursing school loans.

Health System Partnerships With Nursing Programs

Some hospitals partner directly with nursing schools to create pipeline programs. Students may receive discounted tuition, guaranteed clinical placements, or job offers upon graduation. These partnerships can benefit both students and employers by ensuring a steady supply of trained nurses.

Work Commitments in Exchange for Tuition Coverage

Tuition assistance programs typically come with a work commitment. Graduates may be required to work for the employer or sponsoring hospital for a set number of years. While this limits short-term job flexibility, it provides financial stability and guaranteed employment after graduation.

8. Getting a Nursing Degree Abroad

Another option some students consider is earning a nursing degree abroad. In certain countries, tuition and living costs may be significantly lower than in the U.S. Many international nursing programs are also shorter (such as three years instead of four for a Bachelor of Nursing degree), allowing you to enter the workforce faster.

Cost Comparisons and Accreditation Considerations

If you’re thinking about getting a nursing degree abroad, you’ll want to make sure the program meets U.S. licensing requirements and prepares you to pass the NCLEX-RN exam. It’s also important to factor in additional costs — such as credential evaluations and moving expenses (e.g., visas and flights) — to accurately compare the cost to a U.S. program.

9. Military Service

The U.S. military heavily subsidizes or fully pays for nursing school in exchange for service commitments. Options include:

• The Army Health Care Education Reimbursement Program

• Navy Nurse Candidate Program (NCP)

• Air Force Health Professional Scholarship Program

These programs are designed to recruit and train nurses and other health care professionals, and many offer 100% of tuition and fees, sign-on bonuses, and monthly stipends.

ROTC and Nursing Student Incentives

Army ROTC Nursing scholarships provide comprehensive financial support, including full tuition and fees (or room and board), $1,200 annually for books, and a $420 monthly tax-free stipend. Nursing-specific benefits include paid NCLEX-RN review fees, test fees, uniforms, and clinical supplies.

If you’re interested in ROTC, it’s recommended that you join the program as a freshman or sophomore in nursing school. Upon graduation, you are required to serve as an army nurse and officer for four years.

10. Nurse Corps Program

The Nurse Corps program is a federal initiative aimed at addressing nursing shortages in underserved communities. It includes two programs that can help you pay for nursing school:

• The Nurse Corps Scholarship Program covers tuition, fees, and other educational costs for eligible nursing students. In return, after graduation, you work at an eligible health care facility with a critical shortage of nurses for two years. To apply, you must be an accepted or enrolled student in a nursing degree program at a U.S. accredited school of nursing.

• The Nurse Corps Loan Repayment Program will pay up to 85% of unpaid nursing education debt in exchange for at least two years of service at an eligible health care facility with a critical shortage of nurses or an eligible school of nursing. You can apply to the Nurse Corps Loan Repayment Program if you are a registered nurse (RN), advanced practice registered nurse (APRN), or nurse faculty.

Deciding Which Route to Pursue

With so many options available, choosing how to pay for nursing school can feel overwhelming. The right approach will depend on your financial situation, career goals, and willingness to make service or work commitments

Comparing Costs, Commitments, and Career Goals

Some funding options reduce costs upfront but require long-term commitments, while others offer flexibility but lead to higher debt. Weighing total costs, repayment obligations, and career preferences can help you choose the best path.

Combining Multiple Funding Sources

Many nursing students use a mix of scholarships, grants, federal loans, and employer assistance. Strategically combining multiple funding sources can minimize debt while still covering the full cost of education.

Private Student Loans From SoFi

Nursing school is a significant investment, but there are a number of financial aid and career-based programs that can significantly reduce the cost. By starting with the FAFSA, seeking out scholarships and grants, understanding federal and private loan options, and exploring employer, military, or service-based programs, you can build a smart, flexible funding strategy that fits your goals. With careful planning, it’s possible to earn your nursing degree while keeping long-term financial stress to a minimum.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Can FAFSA be used for nursing school financial aid?

Yes, the Free Application for Federal Student Aid (FAFSA®) is essential for nursing school financial aid. By completing the FAFSA, you determine your eligibility for various federal student aid options, including grants (like the Pell Grant), federal student loans (subsidized and unsubsidized), and work-study programs.

Beyond federal aid, many nursing schools require a FAFSA on file to award their own institutional scholarships and need-based grants. To maximize your financial assistance, aim to file as early as possible.

Can an employer pay for you to attend nursing school?

Yes, many hospitals and health care employers offer tuition reimbursement programs and other forms of financial assistance for nursing students. These programs are often designed to address staffing shortages by helping current or future employees pay for school, often in exchange for a work commitment after graduation. This can significantly reduce the out-of-pocket cost of a nursing degree.

Can you use private student loans for nursing school?

Yes, you can use private student loans to pay for nursing school. Private loans, offered by banks, credit unions, and online lenders, are often used when federal aid, scholarships, and grants do not fully cover the cost of attendance.

Just keep in mind that interest rates are based on your (or your cosigner’s) credit score and may be higher than federal loans. Private loans also lack federal protections like income-driven repayment and forgiveness programs. As a result, it’s wise to max out federal options before going private.

What Is the Nurse Corps Loan Repayment Program?

The Nurse Corps Loan Repayment Program pays up to 85% of qualifying nursing education debt in exchange for a commitment to work for at least two years at an eligible health care facility experiencing a critical shortage of nurses, or at an eligible nursing school. The program is open to registered nurses (RNs), advanced practice registered nurses (APRNs), and nurse faculty.

Are there loan forgiveness programs specifically for nurses?

Yes, there are loan forgiveness programs for nurses, including:

• Public Service Loan Forgiveness (PSLF): Available to nurses working full-time for eligible nonprofit or government organizations, PSLF forgives your remaining federal student loan balance after 120 qualifying payments.

• Nurse Corps Loan Repayment Program: This program repays up to 85% of qualifying nursing education debt in exchange for a commitment to work for at least two years at an eligible critical shortage facility or nursing school.

• State programs: Many states offer loan repayment assistance or forgiveness to nurses who agree to work in high-need or underserved areas within the state.

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SoFi Private Student Loans
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