A company-sponsored retirement plan is a common and easy way to build savings for your future, but there are many other ways you can save for retirement. Here are just a few options available to you outside of a company-sponsored retirement plan.
- Individual Retirement Account (IRA) – While annual savings limits aren’t as high as 401(k) plans, Traditional or Roth IRA options offer opportunities to save for retirement using similar investment options. They may also offer portability to roll into a future company-sponsored retirement plan.
- Brokerage Account – While not tax-deferred, a brokerage account is another way to save for retirement, offering similar investments to a company-sponsored plan and control over investment options.
- Traditional Savings Account – Backed by the FDIC and insulated from the ups and downs of the market, an interest-bearing savings account is a safer option to grow your money.
- Health Savings Account (HSA) – The savings you build in your HSA isn’t just for short-term medical expenses. It can be used for other expenses after age 65.
- Simplified Employee Pension (SEP) – If you’re self-employed and/or have a successful side hustle, you can establish a tax-deferred SEP, which is also available to any employees working for you.
Avoid early-withdrawal penalties
If you do participate in a company-sponsored retirement plan and change jobs, resist the temptation to take a cash distribution of your retirement savings because of early-withdrawal penalties. Instead, if you’re able, leave the account in your former employer’s retirement plan. If that option isn’t available, roll the account into an IRA or your new employer’s plan to keep your retirement savings tax-deferred.
Consider consulting with a financial advisor or tax professional to discuss your retirement goals and options.
This article is for informational purposes only and is not intended as legal, tax, or investment advice. You should consult with qualified professional advisors regarding your own situation. Non-deposit investments are not FDIC insured and may lose value. All investments involve risk, including the possible loss of principal.
