No 401(k)? That’s Okay! You Can Still Plan for Retirement

Benjamin Franklin once famously said that nothing is certain except death and taxes. We would also add retirement to that list. No matter how much you enjoy your career, almost everyone will want or need to retire someday. Therefore, we all need to plan for retirement.

But for those who are self employed, or don’t have access to an employer-sponsored 401(k), might find retirement planning to be a daunting task. Luckily you do have other options, such as…

An Individual Retirement Account. Anyone can open an IRA, and begin to enjoy flexible retirement savings options along with certain tax benefits. If you choose a Traditional IRA, you can save up to $6,000 per year (or $7,000 per year once you reach age 50) while lowering your taxable income by the amount contributed.

Or, you can opt for a Roth IRA, and save after-tax dollars now, in exchange for non-taxable withdrawals when you reach retirement.

A solo 401(k). The IRS calls it a “one participant 401(k)”, and it’s available to self employed individuals (independent contractors). Otherwise, a solo 401(k) comes with essentially the same savings opportunities and tax advantages as the employer-sponsored plans.

A health savings account. If you have a high-deductible health insurance plan, you’re eligible to open a health savings account (HSA). You will be able to save pre-tax dollars in this account, to be used for qualified health expenses (like your deductible). Currently the savings limit is $3,500 for those with an individual healthcare plan, or $7,000 for those enrolled in a family plan.

If you don’t use all of the money in the account each year, it can be rolled over into future years – all the way into retirement. Then you can still use the money for health expenses, which are often considerable for retirees.

Consult with a financial advisor. Whether you want to take advantage of these options, or you have a different idea in mind, consulting with a financial advisor can help you identify all of the different paths available to you. We will discuss your goals for the future, along with your current financial situation, and help you make a plan that fits your life.