Seven Ways to Boost Your Retirement Savings If You Don’t Have a 401(K)
Everybody wants to secure their future. As time goes by, strength fades, and the ability to work becomes less. By the time a person gets older, he is starting to think about how to secure the future. The retirement plan begins.
401(k) is famous to citizens of the United States. It is a savings plan where employees can save for their future retirement. Seventy percent (70%) of US citizens enroll themselves in 401(k). The remaining thirty percent (30%) of US citizens not enrolled in the 401(k) are either not interested in applying or haven’t met the employer-match. An employer-match is an offer to the employee for contribution plans. This one-third of the population can still plan their retirement savings even they do not have a 401k.
Here are seven ways you can boost retirement savings even without a 401k. The first five on the list all talk about an IRA. IRA is an acronym for Individual Retirement Accounts. It is the second alternative retirement plan after 401k. You can get almost similar benefits with 401k through these different systems of IRA.
Opening a Roth IRA
401k and Roth IRA works similarly. These two both deal with the retirement plan through after taxes. The two main differences are: first is the contribution limit. 401k contribution is limited, depending on your matching limit. The more income, the more you can contribute. While Roth IRA has an unlimited contribution limit, you can save as much as you want.
A second difference is the retirement process. Roth IRA is given tax-free system where you can withdraw the invested money with its earnings. No deductions anymore once you retire. You are done paying taxes all throughout your whole working time. Now, it’s time to feel the liberty of a tax-free system.
Opening a Traditional IRA
Traditional IRA is like Roth IRA, but you will still be paying taxes on the retirement withdrawal. It has an annual maximum contribution of $5,500. Earned income doesn’t matter, which means you can contribute to whatever income you have as long as it won’t exceed the maximum yearly contribution.
Opening a Simple IRA
People who are running a small business can open a simple IRA. It is a pre-tax contribution with a maximum contribution of $12,000 yearly for people aged less than 50. Simple IRA also includes those people who have a few numbers of employees. They need to offer a three percent (3%) match offer to their workers.
Opening a SEP IRA
SEP IRA is the best for self-employed or freelancers. Your earnings don’t matter as long as you can contribute the one-fourth or twenty-five percent (25%) of your income annually as its maximum.
Opening a Solo 401k
Solo or one-participant 401k is the ideal plan for an entrepreneur. There are two ways to contribute to Solo 401k. The first one is through profit-sharing, where you can contribute up to twenty-five percent (25%) of your income but must not exceed $56,000 in a year. The second option is the elective deferral, where you can contribute up to $19,000 with pre-tax income.
Funding an Investment Account
Another way of saving for retirement is through investment funds. This is directly investing your money to any of the taxable savings accounts that target at least fifteen percent (15%) investment goal.
Creating Own Account Savings
Even if you don’t have the 401k, you can create an account that is exclusive for your retirement plan. Nowadays, a lot of American citizens are doing it. You need to open a new savings account and contribute or deposit it in a regular, timely manner, which could be monthly or yearly. It doesn’t need to cost too much. You can plan your savings with your own and estimate your ideal or target amount once you retire. You can also set up a direct deposit on your savings account, which means you can deposit directly from your paycheck.
In whatever career path you are tracking at the moment, one thing is essential. And that is your future. We can never see what we will become in the future. But better yet to plan it as early as now, because whatever you do today is what you reap tomorrow. We only live once and must live it to the fullest without compromising the future but be ready for it instead.
More in Retirement
Check Out Why So Many of the Rich Choose to Call Montecito Home!
If you have ever wondered where the rich choose to live, one of the best places to look at is the...February 3, 2020
Here Is a List of Businesses You Can Set up without Breaking the Bank
As they say, you can never get rich by just being employed. One should have his own business to set up...January 29, 2020
Private Loans Versus Bank Loans: Which One Should You Choose?
When you need a large sum of money, do you know whether to turn to a bank or to a private...January 27, 2020
This is Everything You Need To Know About Losses In Your Business
Running a business has plenty of learning curves. One of the most important lessons you will have to learn when running...January 26, 2020
Celebrities Affected in Australia’s Bush Fires
For months, the raging bushfires have killed thousands of animals, injured people, and destroyed Australian forests and properties. Since November, it...January 23, 2020
Don’t Fall for Retirement Annuity Traps – Here’s What to Look Out For
In the world of retirement savings vehicles, one of the best inventions is certainly the retirement annuity or RA, as it...January 22, 2020
Eight YouTube Stars with Big Bank Accounts
YouTube has become one of the most popular and talked-about social media platforms. It provides informative and entertaining videos about almost...January 21, 2020
These Were The Biggest Financial Regrets of Americans in 2019
Making financial mistakes is a common thing. Records reveal that around 76% of people in the United States have committed at...January 20, 2020
Ten Ways to Get a Loan if You Have No Credit History
Having a low credit score or no credit is frustrating as it limits your options and sometimes makes it impossible to...January 19, 2020