Retirement Savings Without A 401k
For many people, when they think retirement, they think 401k. That is all fine and dandy, if you have one or are eligible for one through your employer. If you are not one of the lucky ones who are offered a 401k through your employer, you still need to save! You should not let yourself of the retirement savings hook. It turns out you aren’t alone. Over 30% of the work force are not offered an employer sponsored retirement plan. So what should you do?
Retirement Without A 401k
One of our favorite recommendations is to open a Roth IRA. Most of us can contribute up to $5500 each year. If you are over 60 years old you can contribute a little more – up to $6500 per year. You can choose from all different types of funds. This includes those that are more aggressive, the best funds for growth and income, or even those that are more conservative.
With a Roth IRA you pay your taxes when you contribute. When you draw the money in your retirement, it is tax-free. If you want to contribute the full amount to your Roth IRA you must have an earned income. There are also some maximum income limitations. What should you do if you are over these?
A Traditional Roth Could Be Right For You
The maximum contribution amount for a traditional IRA is the same as a Roth IRA. With a traditional IRA you absolutely need to begin withdrawing at age 70.5. At that point, you cannot contribute any more money. Your contributions are tax deductible, but you will pay taxes on the money when you withdraw it.
What Else Can I Do?
Meet with a wealth adviser and contribute to a taxable investment account. We would love to give you a referral so you can find the right investments for you. In addition, one of the best things about a 401k is that it automatically comes out of your paycheck before you even see it. You can recreate that some feeling by setting up direct deposits or transfers to your investment accounts right from your checking account.
No excuses…if you haven’t started saving, now is the best time!