Saving for retirement has become much more simple with automated savings for accounts like 401(k)s, but what do you do if you’re self-employed or work at a company that doesn’t offer a retirement plan? According to a study by the Employee Benefit Research Institute, fewer than half of American workers participate in an employment-based retirement plan.
Whether you work for a small company that doesn’t offer retirement options, you’re a part-time employee that is ineligible for benefits, or self-employed and don’t know where to begin, there are other ways you can plan for the retirement you’ve wanted.
One of the first options to consider is an individual retirement account (IRA), whether it is a traditional or Roth IRA. Traditional IRAs allow you to make contributions with money that you can deduct on your tax return, and the earnings grow tax-deferred until you begin making qualified withdrawals. Roth IRAs, on the other hand, let you contribute to an account with money that has already been taxed, so your withdrawals in the future can be tax-free. IRAs can be great investment vehicles, especially those without an employer-sponsored plan.
Another option is a solo 401(k), also known as individual 401(k)s or self-employed
401(k)s. These accounts can be appealing because they have high contribution limits and you can make more contributions as both the employee and employer, for those who are self-employed. It can be slightly challenging to navigate through the paperwork and guidelines for these plans, but they can be a good opportunity to save a significant amount of your earnings.
Aside from IRAs and solo 401(k)s, you could consider a taxable brokerage account, which allows you to invest in the market in the same way that you would with a retirement account. Unlike retirement accounts, however, they aren’t tax-advantaged and you will have to pay taxes on any earnings from dividends or capital gains. There are no limits on contributions with taxable brokerage accounts, which make them good options for those who have already maxed out IRA contributions.
There are plenty of retirement savings options available to you, regardless of the plans available to you at your job. At American Financial Investments, LLC, we are dedicated to providing you with personalized financial solutions that fit your individual needs. We will help you determine which investment vehicles would work best for you and your retirement goals, and we can find any potential shortfalls that you may have, and devise a plan to help overcome them.
It may seem stressful and overwhelming to plan for retirement when you aren’t set up with an employer-sponsored plan, but with the right help, you can create a strategy that will help your finances and retirement plans stay on track. QCBN
By Ronald Stevenson and Barbara Clark Stevenson
Ronald F. Stevenson & Barbara Clark Stevenson own American Financial Investments LLC. American Financial Investments LLC offer Retirement Income Planning, Social Security Maximization, Personal & Corporate Tax Preparation and Planning. For more information, call 928-771-8368 or visit AmericanFinancialSecurity.net, 3112 Clearwater Dr., Suite B, Prescott, AZ 86305.
Advisory services are offered through American Financial Investments LLC a Registered Investment Advisor in Arizona. Insurance products and services are offered through American Financial Security, LLC. American Financial Investments LLC and American Financial Security, LLC are affiliated companies. American Financial Investments LLC and American Financial Security, LLC are not affiliated with or endorsed by the Social Security Administration, or any other government agency.