Seven Ways to Boost Your Retirement Savings If You Don’t Have a 401(K)

Seven Ways to Boost Your Retirement Savings If You Don’t Have a 401(K)

retirement old sitting relaxing vacation senior elderlyEverybody wants to secure their future. As time goes by, strength fades, and the ability to work becomes less. By the time a person gets older, he is starting to think about how to secure the future. The retirement plan begins.

401(k) is famous to citizens of the United States. It is a savings plan where employees can save for their future retirement. Seventy percent (70%) of US citizens enroll themselves in 401(k). The remaining thirty percent (30%) of US citizens not enrolled in the 401(k) are either not interested in applying or haven’t met the employer-match. An employer-match is an offer to the employee for contribution plans. This one-third of the population can still plan their retirement savings even they do not have a 401k.

Here are seven ways you can boost retirement savings even without a 401k. The first five on the list all talk about an IRA. IRA is an acronym for Individual Retirement Accounts. It is the second alternative retirement plan after 401k. You can get almost similar benefits with 401k through these different systems of IRA.

Opening a Roth IRA

401k and Roth IRA works similarly. These two both deal with the retirement plan through after taxes. The two main differences are: first is the contribution limit. 401k contribution is limited, depending on your matching limit. The more income, the more you can contribute. While Roth IRA has an unlimited contribution limit, you can save as much as you want.

A second difference is the retirement process. Roth IRA is given tax-free system where you can withdraw the invested money with its earnings. No deductions anymore once you retire. You are done paying taxes all throughout your whole working time. Now, it’s time to feel the liberty of a tax-free system.

Opening a Traditional IRA

old man sitting senior retiredTraditional IRA is like Roth IRA, but you will still be paying taxes on the retirement withdrawal. It has an annual maximum contribution of $5,500. Earned income doesn’t matter, which means you can contribute to whatever income you have as long as it won’t exceed the maximum yearly contribution.

Opening a Simple IRA

People who are running a small business can open a simple IRA. It is a pre-tax contribution with a maximum contribution of $12,000 yearly for people aged less than 50. Simple IRA also includes those people who have a few numbers of employees. They need to offer a three percent (3%) match offer to their workers.

Opening a SEP IRA

SEP IRA is the best for self-employed or freelancers. Your earnings don’t matter as long as you can contribute the one-fourth or twenty-five percent (25%) of your income annually as its maximum.

Opening a Solo 401k

Solo or one-participant 401k is the ideal plan for an entrepreneur. There are two ways to contribute to Solo 401k. The first one is through profit-sharing, where you can contribute up to twenty-five percent (25%) of your income but must not exceed $56,000 in a year. The second option is the elective deferral, where you can contribute up to $19,000 with pre-tax income.

Funding an Investment Account

old woman senior crying retirementAnother way of saving for retirement is through investment funds. This is directly investing your money to any of the taxable savings accounts that target at least fifteen percent (15%) investment goal.

Creating Own Account Savings

Even if you don’t have the 401k, you can create an account that is exclusive for your retirement plan. Nowadays, a lot of American citizens are doing it. You need to open a new savings account and contribute or deposit it in a regular, timely manner, which could be monthly or yearly. It doesn’t need to cost too much. You can plan your savings with your own and estimate your ideal or target amount once you retire. You can also set up a direct deposit on your savings account, which means you can deposit directly from your paycheck.

In whatever career path you are tracking at the moment, one thing is essential. And that is your future. We can never see what we will become in the future. But better yet to plan it as early as now, because whatever you do today is what you reap tomorrow. We only live once and must live it to the fullest without compromising the future but be ready for it instead.