Chris O'Shea
If you don’t have a 401(k) at work or are self-employed and are worried about how to save for retirement, you’re in luck. There are some things you can do to make sure your golden years are enjoyable. Here are some other ways to save for retirement.
HSA (Health Savings Account)
The largest single expense retirees face in retirement is healthcare. With that in mind, one way to save for retirement is to open a Health Savings Account (HSA).
Benefits of an HSA
An HSA is a savings and investment account for health and medical expenses. Here is a breakdown of this triple tax-advantaged account:
- Contribute pre-tax money. Whether you contribute through a workplace plan or an individual account, the money that goes into the HSA is not taxed.
- Pay for healthcare tax-free. Use HSA money for medical, dental, vision, Rx, and much more, all without a tax consequence.
- Invest HSA dollars with no tax on gains. Many HSAs allow you also to invest funds in mutual funds or ETFs to grow your money.
HSAs in Retirement
The money in an HSA rolls over from year to year and grows tax-free. If you continue to add money to the account, once you hit 65, you can access funds for anything, not just medical expenses. That means it changes from a medical savings vehicle to a retirement savings vehicle. (There may be taxes on the HSA withdrawals after age 65 depending on your situation, so consult with a tax professional.)
IRAs
Two other ways to save for retirement are the Traditional IRA and the Roth IRA. Both IRAs can invest in stocks, bonds, mutual funds, ETFs, and more. Consult with a financial advisor to help with an investment plan and strategy based on your needs and goals.
- Traditional IRA. This is known as a tax-deferred IRA because it is taxed when you make withdrawals in retirement.
- Roth IRA. You make contributions with after-tax money. The benefit here is that you won’t be taxed when you make withdrawals in retirement.
Brokerage Account
You can always open a brokerage account to save and invest for retirement. With this type of account, there are no penalties for withdrawals and there is no cap on how much you contribute and there may be tax implications on gains and/or losses.
Small Business and Self-Employed Retirement Options
Just because you own a small business or are self-employed doesn’t mean you can’t save for retirement. There are plenty of options to save and invest for retirement.
Solo 401(k)
A solo 401(k), also known as an individual 401(k), or self-employed 401(k) allows you to make contributions as both an employee and as the employer since you wear different hats when it comes to running your business. Here are a couple of benefits:
- High contribution limits compared to other plans, which include employee deferrals and employer profit-sharing contributions.
- You can contribute as an employee (up to $22,500 in 2025, or $30,000 if age 50+) This changes each year, so be sure to check with a tax advisor.
- As an employer, you can contribute up to 25% of your net earnings from self-employment.
SEP IRA
A SEP IRA (Simplified Employee Pension) is a specially designed IRA for self-employed individuals and small business owners that allows contributions of up to 25% of your net earnings from self-employment and it’s easier to run than a 401(k), and no annual filing requirements unless you have employees.
SIMPLE IRA
Savings Incentive Match Plan for Employees, or SIMPLE IRA is a simple retirement plan for small business owners with employees. Here are some things to keep in mind:
- SIMPLE IRA is easier to set up than a 401(k).
- Lower contribution limits compared to a Solo 401(k) or SEP IRA.
- The employer is required to match employee contributions.
Do One Thing: Open a Traditional or Roth IRA.
This information is provided for educational and informational purposes only. It is not to be used as investment, tax, or legal advice or guidance. Please consult with an advisor for guidance on your situation.
