What to Do If Your Job Doesn’t Offer a 401k

Many individuals seek ways to save for retirement beyond a traditional employer-sponsored 401(k) plan. While a 401(k) is a common and effective retirement savings vehicle, it is not the only option available for building financial security. For those whose employers do not offer such plans, or who wish to supplement existing savings, several accessible and effective alternatives exist. This article explores these avenues for long-term wealth accumulation.

Individual Retirement Accounts (IRAs)

Individual Retirement Accounts (IRAs) are fundamental personal retirement savings plans offering various tax advantages. They allow individuals to save for retirement with benefits such as tax-deductible contributions or tax-free withdrawals, depending on the specific type. IRAs represent a primary alternative when a workplace 401(k) is unavailable.

A Traditional IRA allows contributions to be tax-deductible, potentially lowering current taxable income. Earnings grow tax-deferred, with taxes paid upon withdrawal in retirement. Qualified withdrawals are then taxed as ordinary income. For 2025, individuals can contribute up to $7,000 to a Traditional IRA.

However, Traditional IRA contribution deductibility can be limited if an individual is also covered by a retirement plan at work and their income exceeds certain thresholds. For example, in 2025, the deduction for joint filers may be phased out if their modified adjusted gross income (MAGI) is between $126,000 and $146,000. If not covered by a workplace plan, contributions are generally fully deductible.

In contrast, a Roth IRA uses after-tax contributions, which are not tax-deductible. The significant benefit is that qualified withdrawals in retirement, including all earnings, are completely tax-free. This provides a valuable advantage for those who anticipate being in a higher tax bracket during retirement.

Eligibility to contribute directly to a Roth IRA is subject to income limitations. For 2025, single filers can make a full contribution if their modified adjusted gross income (MAGI) is less than $150,000, while married individuals filing jointly can contribute fully if their MAGI is less than $236,000. If income exceeds these thresholds, a “backdoor Roth” strategy may be an option, involving non-deductible contributions to a Traditional IRA and then converting them to a Roth IRA.

The annual contribution limit for IRAs in 2025 is $7,000. This limit applies across all IRAs an individual holds, meaning the total contributed to all Traditional and Roth IRAs combined cannot exceed this cap. Individuals aged 50 and over can make additional “catch-up” contributions, increasing their 2025 limit by $1,000 to $8,000. This allows older savers to accelerate their retirement funding.

A Spousal IRA allows an individual with earned income to contribute to an IRA on behalf of their non-working or lower-earning spouse. This enables couples to save for retirement in two separate IRA accounts, even if only one spouse has taxable compensation. The same contribution limits and rules apply.

Opening an IRA is straightforward, available through various financial institutions like banks, brokerage firms, and mutual fund companies. Individuals can select investment options within their IRA, such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs), tailoring their portfolio to risk tolerance and financial goals.

Health Savings Accounts (HSAs)

Health Savings Accounts (HSAs) are specialized, tax-advantaged savings accounts serving a dual purpose: covering current medical expenses and acting as an additional retirement savings vehicle. Eligibility for an HSA requires enrollment in a High Deductible Health Plan (HDHP). For 2025, an HDHP must have a minimum annual deductible of $1,650 for self-only coverage or $3,300 for family coverage. Additionally, the plan’s annual out-of-pocket expenses, excluding premiums, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage.

HSAs offer a “triple tax advantage.” Contributions are tax-deductible, reducing current taxable income. Funds within the account grow tax-free, allowing investments to compound without annual tax implications. Qualified withdrawals for eligible medical expenses are also tax-free. This combination of tax benefits makes HSAs a powerful savings tool.

For 2025, the HSA contribution limit is $4,300 for individuals with self-only HDHP coverage and $8,550 for those with family HDHP coverage. Individuals aged 55 and older can contribute an additional $1,000 annually as a catch-up contribution. These limits apply to all contributions, including employer contributions.

Once a balance is accumulated, HSA funds can be invested, similar to an IRA. This allows the account to grow over the long term, enhancing its utility as a retirement savings vehicle. Investing HSA funds while paying for current medical expenses out-of-pocket maximizes tax-free growth.

While primarily for healthcare costs, an HSA can function as a retirement account. Funds can be used tax-free for medical expenses at any age. After age 65, withdrawals for non-medical expenses are taxed as ordinary income, similar to a Traditional IRA, but without the 20% penalty that applies to non-qualified withdrawals before age 65. This flexibility positions HSAs as a valuable component of a comprehensive retirement strategy.

Taxable Investment Accounts

Taxable investment accounts, also known as brokerage accounts, offer a flexible option for saving and investing without the specific tax advantages or restrictions of retirement accounts. These accounts allow individuals to invest in a broad array of assets, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Contributions are made with after-tax dollars and do not offer an upfront tax deduction.

Taxable investment accounts have no annual contribution limits. This allows individuals to invest as much as they wish, providing unlimited savings potential beyond tax-advantaged accounts. This flexibility is useful for those who have maximized IRA and HSA contributions or have substantial additional savings goals.

Funds in taxable investment accounts are highly liquid and accessible at any time without age restrictions or penalties. While flexible, capital gains taxes may apply when investments are sold for a profit. This contrasts with retirement accounts, where withdrawals are subject to specific age and qualification rules.

Tax implications for taxable accounts involve income from investments and capital gains from sales. Dividends and interest are taxed as ordinary income when received. When an investment is sold for a profit, the gain is subject to capital gains tax rates, which vary based on how long the asset was held. Short-term gains (assets held one year or less) are taxed at ordinary income rates, while long-term gains (assets held over one year) qualify for lower rates.

Taxable investment accounts serve as a complementary tool in a holistic financial plan. They are suitable for shorter-term financial goals requiring immediate access to funds, or as a supplementary vehicle for long-term retirement savings after other tax-advantaged options are maximized. Their flexibility and unlimited contribution potential make them valuable for comprehensive wealth building.