Key Points
- A Roth IRA enables you to invest and then withdraw your money tax-free after age 59 1/2.
- A taxable broking account might be a good complement to retirement savings.
- Self-employed individuals may set up a solo 401(k) or a SEP IRA to take advantage of the increased contribution limits.
How to Save for Retirement Without a 401-k:
If you’re not saving for retirement with a 401(k), it’s not simple, but it’s not impossible. According to the Aspen Institute, 56 million Americans are experiencing this problem because they don’t have access to a workplace 401(k) or the advantages it offers, such as automatic enrolment and contributions, high contribution limits, or employer-matching money.
Though 401(k) advantages might help automate and speed up the growth of your savings, it doesn’t imply you can’t prepare for retirement without any form of employer-sponsored retirement plan.
And if you are aware of the alternative retirement accounts available to you, such as individual retirement accounts (IRAs), taxable brokerage accounts, and solo 401(k)s, you may create the comfortable retirement you desire. Here’s everything you need to know.
1. Contribute to a Roth IRA if you’re eligible
You cannot deduct your Roth IRA contributions from your taxes for the year you make them. The upside is the gains in a Roth IRA are tax-deferred, and after you reach age 59 1/2, you may take your money out tax-free, as long as it has been at least five years since your initial Roth IRA contribution.
However, the tax deferral on gains in your Roth IRA is beneficial since it speeds up the building of your nest egg. And the option to take money out tax-free in retirement may save you thousands of dollars a year, particularly if you are in a high tax rate at retirement.
There’s another Roth IRA advantage: Because you put after-tax money into a Roth IRA, you can withdraw your contributions at any time without penalty. This is also why a Roth IRA may double as an emergency fund. If you’re not at the age where you can take money out without penalty, you’re simply penalized for taking money out of your earnings.
There are two disadvantages to a Roth IRA: For one, the annual contribution limits are rather modest. In 2026, you may contribute up to $7,500 a year, or $8,600 if you’re 50 or older. And secondly, you have to be eligible to contribute to a Roth IRA, depending on your income and tax filing status. If you make a lot of money, you can’t deposit money in a Roth IRA, as the chart below indicates.
2. Contribute to a traditional IRA
If your salary is too high to contribute to a Roth IRA, you may contribute to a regular IRA instead. Those payments are tax-deductible unless you have a retirement plan via your employment, or unless your spouse has a retirement plan. If so, deductible contributions start to taper down at a family income of $242,000 or above in 2026 and are eliminated at a family income of $252,000.
The tax structure of the classic IRA is like that of the 401(k). Contributions are made with pre-tax cash, profits are tax-deferred, and payouts are taxable.
3. Contribute to a taxable brokerage account
Those low contribution limits mean you probably need to start saving in your early 20s to attain a comfortable retirement from IRA contributions alone. Obviously, if you’re already over 25, that’s not an option.
Instead, you may add to your IRA funds by making deposits into a taxable brokerage account.
As your brokerage account increases, so will your tax burden. Mutual funds provide dividends, interest, realized profits, and capital gains, and they are taxed each year. You may even be proactive about your tax burden by investing in tax-efficient mutual funds and buy-and-hold equities that don’t generate dividends.
Good reasons not to trade on impulse. Your investments in stocks that do not pay dividends are only taxed when you sell them and realize gains. Buy excellent stocks that you can hang on to for a long time.
4. Launch a profitable side hustle and open a solo 401(k) or SEP IRA
If you don’t want to save for retirement without a 401 (k), you might start your own. You’d need to start a side business and open a solo 401(k) or Simplified Employee Pension (SEP) IRA.
What’s good about these accounts is that they have extremely large contribution limits. For 2026, you may contribute as much as $72,000 to a SEP IRA or solo 401(k), depending on your self-employment income. If you are 50 or older, you may add another $8,000 to the single 401(k) limit ($11,250 for ages 60 through 63).
There are caveats, though:
- SEP IRA contributions are limited to 25% of your company’s revenue.
- With a Solo 401(k), you may contribute as both the employee and the employer. As a company employee, you may contribute up to $24,500 of your pay in 2026 (with an extra $8,000 catch-up contribution if you are age 50 or older). As the employer, you may contribute up to 25% of your earned income, with a maximum total single 401(k) contribution of $72,000 for most workers, $80,000 if you are age 50 or older, and $83,250 if you are ages 60-63.
The larger point is that your firm has to be successful to contribute to these funds. For example, you can’t acquire a company license for a hobby, create a solo 401(k), and then put money in from your full-time employment.
Save and invest somewhere.
A 401(k) could make saving for retirement easier, but you can still become wealthy without one. “The trick is to save and invest somewhere, even if it’s going to cost you taxes.”
The little hardship of a larger tax payment now is significantly easier to bear than approaching your senior years with no savings. You may prevent that destiny by setting aside money now and being patient as it develops.