Let’s explore some ways to save for your golden years when you don’t have a 401(k).
IRAs
One of the best ways to save for retirement is using a traditional IRA or Roth IRA. The main difference between the two is when you pay the taxes.
- Traditional IRA. For a Traditional IRA, you can defer paying income taxes on as much as $7,000 which can then be contributed to your IRA. While not paying taxes is nice now, keep in mind that you will pay tax when you eventually withdraw the money from the account.
- Roth IRA. If you open a Roth IRA, you can contribute up to $7,000 after-tax money. Then, you can make withdrawals tax-free.
If you open either of these accounts, make sure you have a direct deposit setup, so the contributions are always coming in.
Health Savings Account (HSA)
A Health Savings Account (HSA) is an investment/savings vehicle to help with medical expenses. The contributions are sometimes tax deductible and withdrawals for qualified medical costs are tax-free.
High Yield Savings Accounts
Search for a high-yield savings account to stash your long-term savings. Look into credit unions, online banks, and mobile apps for accounts with the best yields.
Do One Thing: Open an IRA even if you have a 401(k), it can’t hurt to have multiple retirement savings options.
First published Chris O’Shea and our partners at SavvyMoney.com
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