When we talk about saving for retirement, we’re often speaking to those who have access to an employer-sponsored 401(k) plan. But what if your company doesn’t offer this option? You wouldn’t be alone; about 38 million working Americans don’t have access to this type of retirement opportunity. But you still have options…
First, talk to your employer. Express your interest in a 401(k) plan, so that they know their employees are interested in this benefit. Tax credits are available to help small businesses provide workers with a retirement savings plan, so this might become an option for them in the future.
Consider your employment status. If you’re a regular W-2 employee without access to an employer-sponsored retirement plan, you might be interested to know that independent contractors can access options like a SEP IRA, Individual 401(k), and self-funded pensions. You might consider inquiring whether you can change your employment status with your company. However, do be aware that there will be tax consequences (and perhaps other implications) of this decision. Research carefully to see whether this plan is even feasible for you.
Opt into a health savings account (HSA). If your employer supplies a high-deductible health insurance policy to workers, you might be eligible to fund a health savings account. You will be able to save pre-tax dollars (while earning a valuable tax deduction) toward uncovered healthcare expenses. But if you don’t use this money each year, it will roll over into future years… All the way into retirement.
In this way, you can at least save for healthcare expenses in retirement, which will be significant for most retirees. You will be able to use this money for Medicare premiums, co-pays, deductibles, certain equipment and prescriptions, and more.
Choose an IRA. If you don’t have access to an employer-sponsored 401(k), you might be able to open an Individual Retirement Account (IRA). You will also be able to choose the tax status that best suits your situation (Traditional or Roth), and you might enjoy some tax benefits as well. For more information on IRAs, give us a call and we will walk you through your options.