Of the nearly 42 million Americans who work for small businesses, only 14 percent are offered a retirement plan, according Goa.gov. So, if you are not offered a retirement plan, what are some alternative ways to save money?
Ask Your Employer About Savings Options
If there is no available retirement plan, speak to your company about other options. When working for a small company, for example, take it upon yourself to inform management that offering such plans can benefit the company, overall. Tax credits are available for employers who sponsor retirement plans. Bosses can also use these plans to shelter their own taxable income. Also, instead of paying bonuses in cash, they can contribute to a savings plan.
Open Your Own Retirement Accounts
When you decide to invest on your own, there are many ways to put away money for the long term. Try contributing to either an individual retirement account or fund a post-tax Roth IRA. A Roth IRA is a very popular option for those with or without a 401K plan. This plan will grow at a 100 percent tax-free rate. Contributors are also allowed to withdraw the amount they contributed with no penalties enforced.
Typically, most individuals will aim to fully fund their IRA during the first month of each year. That way, the money has the full 12 months to grow. Anyone who is married has the option to contribute to a spousal IRA on your spouse’s behalf. These plans will let you put aside an extra $5,500-$6,500 for your spouse as long as they are not currently working.
Open A Health Savings Account
Whether you have chosen to open an IRA, CD, save tax refunds or all of the above, you should consider opening a health savings account. A health savings account (HSA) has several benefits, including tax-free withdrawals and tax-free growth potential, among the positives. You can take money out of this account with no penalties associated after the age of 65.
Can I Save For Retirement Without A 401K?
Here are a few tips to help you save for retirement without a coveted 401k:
The simplest way to begin saving for retirement at any age is by putting your tax return away once you received it. Do this every single year, if you can afford it. There are several options with how you can save or invest this return each season. IRS Form 8888 will allow taxpayers to deposit the refund directly into two or more separate savings or investment accounts. Be sure to refrain from spending your tax refund and put it away for retirement.
The most popular option for employees without a 401k is opening an IRA. Of course, there are a few different types of IRAs. Either a Roth IRA or a traditional IRA will prove beneficial in the long term. And the best news is this is not an exclusive offering. Any individual who earns an income can open an IRA. This includes individuals who are unemployed, but married to a spouse earning an income. This is a terrific option for freelancers or the self-employed.
A CD or certificate of deposit offers another option for individuals without a 401k. Everyone could use some liquid cash, right? One obvious benefit is that most of the time your money can be withdrawn on demand. So, if you run into any medical emergencies or pressing financial situations, you can pull this money out right away. CDs are insured by the federal government to never lose any value. CDs are as safe an investment as one can make today.
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