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High-Income Earners Retirement Savings Guide for 2023 Thumbnail

High-Income Earners Retirement Savings Guide for 2023

You know preparing and saving early is key to reaching your retirement goals—but as someone who makes six figures or more, you might have encountered some roadblocks. Many in the medical or university fields face several financial hurdles when preparing for retirement, as their income can limit them from utilizing certain tax-advantaged retirement savings strategies. If you make six figures or more, you know you need to plan now to maintain your lifestyle through retirement. Here are things highly compensated executives and employees like you can do to save for retirement.

Why Are High-Income Earners at a Disadvantage?

The IRS offers several tax-advantaged retirement savings options. However, most of these options offer some sort of income cap, making it harder for high earners to take advantage of these tax-saving strategies. But high earners face the same challenge as moderate-to-low-income-earning employees: sustain a similar lifestyle in retirement by maintaining financial independence. When high earners are limited in their options for saving for retirement, it can make reaching their goals for retirement more challenging.

Retirement Saving Strategies

Once you're able to identify any roadblocks you may be facing, focus your attention on the retirement-saving strategies that may work best for you and your family.

Strategy #1: Contribute to a 401(k), 403(b) or 457

If you aren't doing so already, contributing to an employer-sponsored 401(k), 403(b), or 457 plan would be an effective way to start saving for retirement. For 2023, you may defer up to $22,500 or $30,000 if you’re 50 or older of your pre-tax earnings toward most employer-sponsored plans. Many employers will offer matching contributions as well, up to a certain percentage of your contributions. The total contribution limit for 2023 is $66,000, plus an additional $7,500 for those 50 or older, or 100 percent of an employee's compensation, whichever is lower.1

The salary limit for deferring compensation is $330,000 for 2023. If you make more than this amount, this doesn't mean you can't contribute to your plan. An employee can defer compensation to their employer plan throughout the year until their year-to-date earnings reach $330,000. Once that maximum is reached, an employee can no longer defer earnings toward their plan.1

As a high earner, your employer plan will likely offer the highest contribution cap for tax-deferred retirement savings, making it an important cornerstone of your retirement saving strategy.

Strategy #2: Roth or Traditional IRA 

Roth IRAs allow retirees to make tax-free withdrawals in retirement, meaning they can be appealing to those saving for retirement. Unfortunately, this may not be an option for some high earners. If your modified adjusted gross income is more than $153,000 for 2023 as a single filer or $228,000 as a joint filer, you are not eligible to contribute after-tax dollars to a Roth IRA account. If you make between $138,000 and $153,000 as a single filer or between $218,000 and $228,000 as a joint filer, you may be eligible to contribute a reduced amount.2

A traditional IRA, however, does not have an income limit, making it an available option for high earners. The only prerequisite is that you earn any income at all. However, it's important to note that you may be limited in how much of your IRA contribution you can deduct on your tax return.

How much you can deduct from your taxes will depend primarily on two things:3  

  • Your modified adjusted gross income
  • Whether or not you actively contribute to your employer-sponsored retirement plan

Strategy #3: Backdoor Roth IRA

Building on the strategy above, those who are interested in tax-free withdrawals in retirement—but aren't eligible to utilize a Roth IRA—may benefit from a backdoor Roth IRA. As the name suggests, this strategy offers high-income earners a roundabout way of placing their after-tax dollars into a Roth IRA account.

To do this, you'll have to:

  1. Open and contribute to a traditional IRA account.
  2. Have an account administrator provide the paperwork and instructions for converting your traditional account into a Roth IRA.
  3. Prepare to pay taxes on the money in the account and any gains it may incur.

If this sounds like an option you may be interested in pursuing, your financial advisor or CPA will be able to offer more guidance and instruction regarding this process.

If you're earning six figures or more, it may be helpful to work with a financial advisor or retirement specialist who can help you understand your savings options. Depending on your age, goals for retirement, and current financial standing, you may determine with a specialist that a more aggressive strategy (e.g., a taxable investment account) may be a viable option. Whatever strategy you choose, be sure to stay up-to-date on contribution limits and eligibility requirements. This can help you and your retirement savings avoid any surprise tax bills now or toward retirement.


  1. https://www.irs.gov/retirement-plans/401k-plans-deferrals-and-matching-when-compensation-exceeds-the-annual-limit
  2. https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023
  3. https://www.irs.gov/publications/p590a


Jeff Spitzmiller is the CEO of Ohana Wealth & Life Planning based in Cincinnati, OH.   Ohana specializes in life and financial planning along with ESG (Environmental, Social, Governance) investing principles for professionals in the healthcare and university fields.   The firm is an independent financial advisor and a fee-only fiduciary.  Jeff and the firm also enjoy volunteering and giving back to the local community.  You can reach Jeff at jeff@ohanaplanning.com.

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