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No 401(k) Match? 3 Alternate Ways to Save for Retirement in 2021

By Kailey Hagen - Jan 9, 2021 at 10:00AM

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These strategies can help you boost your retirement savings all on your own.

More than 16% of large organizations suspended 401(k) matching, at least temporarily, due to the COVID-19 pandemic, according to the Plan Sponsor Council of America. If you've lost your match or you just never had one, the burden of retirement savings rests entirely on your shoulders. It's a difficult position to be in, but with the right strategies, you can make up for the lack of a 401(k) match and keep yourself on track for the retirement you want. Try one or more of the tips below.

1. Reduce your expenses

Often the simplest way to increase your retirement savings is to change how you're allocating your funds. Review your budget and look for areas of overspending, like paying for unused subscriptions or buying takeout several nights per week when cooking at home would be more affordable. Reduce or eliminate these costs and put the excess money toward your retirement savings.

Worried couple looking at financial documents

Image source: Getty Images.

Of course, the simplest method isn't always the easiest one, especially with so many people still struggling financially due to the pandemic. If your budget is already down to the bare minimum, try one of the other suggestions below instead.

2. Start a side hustle

Side hustles give you an opportunity to earn some extra cash on your own terms, and sometimes they can turn into full-time jobs if you want them to. While most of us may find the prospect of additional work draining, side hustles don't have to be dull. You can choose something that aligns with your interests, like creating and selling art, helping others build websites for their businesses, or even walking dogs.

Use your earnings from your side hustle to build up your retirement savings. Some of your side hustle income technically belongs to the government as taxes, but if you use the right retirement account (more on that below), you may be able to set aside more money for retirement without affecting your tax bill. 

When considering a side hustle, remember to weigh any costs associated with it to decide whether it's actually worth it. For example, rideshare drivers spend more on gas, put more wear and tear on their vehicles, and may need special insurance coverage. That can offset some of your profits, so you must keep that in mind when assessing how much money your side hustle will give you for retirement.

3. Keep your money in tax-advantaged accounts

You can technically keep your retirement savings anywhere -- even in a savings account or taxable brokerage account. But if you want to hold on to as much money as you can, you should keep it in a tax-advantaged retirement account. A 401(k) or other workplace retirement plan is still a good option, even if your plan doesn't have a match. You can automatically defer a certain dollar amount or percentage of your income from each paycheck to your 401(k) and contribute up to $19,500 in 2021 or $26,000 if you're 50 or older.

An IRA is another option if you don't have access to a workplace retirement plan, or you just want a little more control over what you can invest in. Anyone can open one of these and you can add money whenever you'd like, but you can only contribute up to $6,000 in 2021 or $7,000 if you're 50 or older.

You must also decide whether tax-deferred or Roth accounts make more sense for you. Tax-deferred contributions give you a tax break today, but then you owe income taxes on your withdrawals. The government taxes Roth contributions in the year you make them, but then your withdrawals are tax-free. 

Tax-deferred accounts are usually a better fit if you think you're earning more now than you'll spend annually in retirement. You may also want to consider one of these if you're saving side hustle income for retirement and you don't want to worry about it raising your income tax bill this year. Roth accounts could be the wiser choice if you believe you're earning about the same or less than you'll spend in retirement.

This isn't an exhaustive list of how you can find more money to save for retirement. The tips above are good starting points, but go beyond them and brainstorm other ways to boost your savings. See if there are other companies hiring in your industry that pay more, or look for promotion opportunities within your existing company. Whenever you get a raise, boost your retirement savings first. And if your company does begin to offer a 401(k) match, make sure you take advantage of it every year it's available.

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