How to Save for Retirement without a 401k

Save for Retirement How to Save for Retirement without a 401k Saving for retirement is a different mountain to climb when employers don’t offer the benefits of a 401k plan. The Employee Benefit Research Institute says a lack in retirement confidence grew this year to 27 percent from 22 percent in 2010. Over a quarter of the U.S. population says they are not at all confident about their retirement trek. Mapping out the terrain when employers do not offer 401k benefits can boost confidence. There are ways to save for this upcoming encounter.

IRAs- The Essential 401k Alternative

Individual retirement accounts allow for contributions of $5,000 for those under 50 and $6,000 for those over 50. A Roth IRA requires income taxes, but withdrawals are tax-free. These savings are accessible when the account holder reaches 59 1/2 years of age and has had the account for five years. A traditional IRA is tax-deductable, under certain terms, and requires withdrawals once an investor reaches 70 1/2 years old. There are also possibilities to rollover Roth 401ks from a previous employer to a Roth IRA. This route is the Lassie of retirement guides-both trusted and reliable.

Annuities- Less restrictions, more of a gamble

This type of investment is contracted with a life insurance company and works like a pension plan with one lump sum or timed payouts. Payment options depend on what type of annuity is contracted, like fixed-immediate or deferred. Contributions are limitless, but keep a careful watch on what type of company is taking the cash. There are trolls on this path and free services like a Retirement Calculater at RetirementCalculator.com can eliminate annuity villains.

Target Date Funds- Money with a brain

The Pension Protection Act of 2006 made this a practical mutual fund opportunity over a 401k. Target date funds, aka life-cycle funds, automatically accrue stocks and bonds on an investment path. As time progresses, allocations are weighted and controlled according to when an investor wants to withdraw. The “to retirement” option becomes more conservative when approaching a planned retirement date. A “through retirement” option knowingly anticipates a longer payout window and invests accordingly.

Life Insurance Retirement Plan (LIRP)- Living with assurance

“Life insurance” may bring about grim visions, but a LIRP is perfect for those who have already reached the maximum contributions on other retirement saving selections, like IRAs. Once money is invested in the plan, it can be an income outlet and a way to cover costs for those paying bills after an account holder passes away. Another big plus is this type of plan is tax-free.

Solo 401k- Be the boss

For the self-employed, or those who want to start a small business, solo 401ks are feasible. This type of account requires the business to have W-2 employees on payroll, and employees cannot be spouses. Entrepreneurs-at-heart may already have a small business in the works or dream of the chance. A solo 401k plan can benefit retirement savings, tax deductions, and loan availability.

As morale reaches a low, savings tactics go beyond the typical 401k.

“Overall, 37 percent of full-time employed adults of all ages say they have thought in the past year about postponing their eventual retirement,” says Rich Morin, senior editor for the Pew Research Center, “This proportion swells to 52 percent among fulltime workers ages 50 to 64.”

Not having an employee supported 401k plan is not the end of the retirement trail. Saving opportunities don’t stop there.