How to Save for Retirement if You Don’t Have a 401(k)

Americans without access to 401(k) plans can still save for retirement, thanks to many other vehicles (which can also be used by individuals with 401(k) plans who want to supplement their savings). Two types of individual retirement accounts (IRAs) are available: traditional IRAs and Roth IRAs. Traditional IRAs are tax-deductible in the year you make the contribution (thus lowering your taxable income), and withdrawals are taxed at income tax rates. With Roth IRAs, contributions are made with after-tax dollars, but future withdrawals are tax-free. Whichever you choose may depend on how much you expect to earn in retirement – if more, consider a Roth; if less, a traditional IRA.

More options:

  • A myRA account is a Roth retirement savings account developed by the U.S. Department of the Treasury for people without access to another plan. There’s no charge to open a myRA.
  • To contribute to a Health Savings Account (HSA), you’ll need a high-deductible health insurance plan. If you have one, though, the benefits are much like those of traditional IRAs. Contributions are tax-deductible in the year you make them, the money grows tax-deferred, and withdrawals made are tax-free as long as they are used for medical expenses.
  • With a fixed annuity, you give an insurance company a lump sum now, or payments over time, and when you retire, the company provides a stream of income that can last a specified period of time or for your lifetime.

Note: This material has been prepared for informational purposes only and is not intended to provide financial advice.