4 Retirement Saving Strategies If You Don’t Have a 401(k)

The 401(k) is considered the quintessential retirement savings plan by many. However, not everyone has access to an employer-sponsored 401(k) plan.

Nearly 35% of workers in the private industry do not have a 401(k) plan. If you are one among them, you might be wondering how to save for your retirement.

Consider the below-mentioned four investment strategies that can help you save for your retirement even if you do not have a 401(k) plan.

Traditional and Roth IRAs

Depending on your preference and needs, you can choose to open a traditional IRA or a Roth IRA to save for your retirement.

You can open a traditional IRA regardless of your annual income and the contributions you make are tax-deductible. The withdrawals, on the other hand, are taxable.

You can open a Roth IRA if your annual income is less than $125,000. If you are married and if you and your spouse are filing jointly, you are allowed to open a Roth IRA as long as your combined income is less than $198,000.

The contributions you make are taxable. The withdrawals, on the other hand, are not.

Solo 401(k)

If you are self-employed or a sole proprietor, you can open a sole participant 401(k) account, commonly referred to as the solo 401(k).

The best part about the solo 401(k) plan is that it allows you to make contributions as an employee and as an employer.

You can contribute up to the full 401(k) amount available to bigger plans and more if you are 50 or older as an employee.

Plus, you are also allowed to contribute up to 25% of your income as an employer until to an IRS-mandated maximum.

Brokerage account

It can be difficult to build a substantial nest egg for your golden years without investing in the market. As they say, the market is where the money is.

You can set up a brokerage account and start investing in stocks, mutual funds, exchange-traded funds, money market funds, and bonds.

If you are not good at stock picking or if you think investing in individual stocks is too risky you can invest in an index fund, which can be much safer compared to owning individual stocks.

Rental real estate

Investing in rental real estate can be a good idea if you need a source of passive income in your retirement. The monthly rental income can help you meet your day-to-day expenses without dipping into your savings.

Depending on your preference and the amount of capital you can afford to invest, you can choose to buy residential or commercial real estate property.

If you do not prefer to buy physical property, investing in a real estate investment trust (REIT) might be the right choice for you.

These trusts invest in income-generating properties and divide the rental income among the investors on a quarterly basis. Some REITs pay out dividends on a monthly basis as well.