How to Save for Retirement Without a 401K

Learn how to save for retirement without a 401k. Our insider tips will help you build a comfortable nest egg for your golden years!

Retirement planning can seem daunting, especially if you don't have the benefit of a 401k through your employer. But don't worry — we've got you covered! With some strategic planning and insider tips, you can still build a comfortable nest egg to support you in your golden years. 

Open an IRA

An IRA is designed specifically for retirement savings. But unlike a regular savings account, an IRA is an investment account that offers tax benefits, which can help your retirement savings grow faster. This means you can earn a higher return on your investment and get closer to achieving your retirement goals.

Another benefit of an IRA is that it offers more flexibility than a 401(k) plan. With an IRA, you have more control over your investments, which means you can choose the investments that align with your investment goals and risk tolerance. Plus, you can open an IRA anytime, even if you don't have access to a 401(k) plan through your employer.

Traditional IRA vs. Roth IRA

With a traditional IRA, you can contribute pre-tax dollars and defer paying taxes until you withdraw the money in retirement. This option can be beneficial if you're currently in a high tax bracket but expect to be in a lower bracket once you retire.

On the other hand, a Roth IRA lets you contribute after-tax dollars, meaning you pay taxes upfront. However, you won't pay taxes on your withdrawals during retirement. This option may be a good fit if you anticipate being in a higher tax bracket once you retire.

IRA definition with City & County Credit union

But that's not all! IRAs also offer a wide range of investment opportunities, including: 

  • Stocks
  • Bonds
  • Mutual funds
  • EFTs (electronic funds transfer) 

This means you have the potential to earn a higher return on your investment compared to a traditional savings account.

Remember that annual contribution limits exist for both types of IRAs. As of 2023, you can contribute up to $6,500 per year or $7,500 if you're over 50. Additionally, contributions to a traditional IRA may be tax-deductible, while contributions to a Roth IRA are not.

Open a High-Yield Savings Account

Chart displaying investment growth with a high yield savings account

A high-yield savings account is like a traditional savings account but with a higher interest rate. This means that your money will grow faster over time, making it a great option for those who want to save for retirement but don't have access to a 401k.

At City & County Credit Union, we offer competitive interest rates on our high-yield savings accounts, making it an excellent option for those looking to maximize their savings. With no monthly fees and no minimum balance requirements, it's an easy and affordable way to start building your nest egg.

Not only is a high-yield savings account a great option for retirement savings, but it can also be used for short-term goals like saving for a down payment on a house. Plus, because the funds are easily accessible, you can use the money whenever you need it without penalty.

What About Retirement for the Self-Employed? 

If you're self-employed and don't have access to a 401k, here are some options for saving for retirement:

  • Solo 401(k): This retirement plan is designed for self-employed individuals or small business owners with no employees other than a spouse. With a Solo 401(k), you can make contributions as both the employer and employee, which means you can contribute up to 100% of your compensation (up to certain limits) and take advantage of tax-deferred growth. This plan can be a good option if you want to save a significant amount of money for retirement and have the ability to make large contributions.
  • SEP IRA: A Simplified Employee Pension (SEP) IRA is a retirement plan that is tailored to the needs of self-employed individuals and small business owners with a few employees. With a SEP IRA, you can make tax-deductible contributions up to 25% of your net self-employment income (up to certain limits), which means you can save more money for retirement and reduce your taxable income at the same time. This plan can be a good option if you want a simple and flexible retirement plan with low administrative costs.

Think PinkA couple planning their retirement with CCCU

It's never too late to start planning for retirement. Whether you're just starting out in your career or nearing the end of it, saving for retirement is an important step toward achieving financial security.

At City & County Credit Union, we're here to help you plan for your retirement and reach your savings goals. With our expert guidance and a range of retirement accounts tailored to your specific needs, we can help you navigate the complex world of personal finance and build a solid foundation for your future.

In addition to retirement planning, we also offer high-yield savings accounts and convenient digital financial services to help you manage your money with ease. We put our members first, and we’re here to help you every step of the way.