4 Ways to Save for Retirement Without a 401(k), IRA or Roth
Saving for retirement can be a challenging process. Especially if you don’t have access to employer-sponsored plans like a 401(k) or 403(b), or a traditional or Roth IRA. While saving as much as can should be your main goal, there are other vehicles you can use to your advantage. From brokerage accounts to real estate, we are sharing 4 ways to save for retirement without using a traditional retirement plan.
1. Brokerage Accounts
Retirement plans like IRAs and 401(k)s are popular because they offer tax deferrals and investment options to account holders. In contrast, a brokerage account won’t offer tax deferrals, but you will be able to build an aggressive investment portfolio.
By having a brokerage account, you’ll have access to a large selection of investments. These include individual stocks and bonds, mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), certificates of deposit (CDs) and money market funds. If you use options like stocks, mutual funds, and ETFs you’ll have a bigger chance of seeing higher returns when compared to a traditional account. It does come with risks though. But, you can add stability to your portfolio by using bonds, CDs and money market funds.
You can get a brokerage account online, or at certain banks and credit unions. Also, through a financial advisor or a licensed broker.
2. Tax-Deferred Annuities
Another vehicle you can use in your retirement strategy is a tax-deferred annuity. Annuities are designed to defer tax and slowly grow your savings over time. You can obtain one through an insurance company. They can with either a fixed-interest rate, an indexed interest rate or with a variable rate which is tied to market performance.
Potential downsides of this retirement strategy are that the annuities do become taxable once you start to receive the money from it. Additionally, the performance of the investment is uncertain and more often than not insurance brokers are more concerned with the commission they’ll make, rather than if it’s the right vehicle for you. Some insurance agents charge a 10% commission on your entire fund which is highly expensive compared to ETFs and mutual funds.
If you’re interested in an annuity, speak to a trustworthy financial advisor. It’s important to get advice on whether this kind of retirement vehicle is right for you and your budget.
