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No 401(k) Match? 5 More Creative Ways to Save for Retirement

By Sam Swenson, CFA, CPA - Jun 6, 2021 at 5:55AM

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Think outside the box and make the most of the accounts you have.

Many employers offer a match of around 3% to 6% of any contributions you make to your employer-sponsored retirement plan. You can view these matching contributions as a 100% return on your money, and they often serve as a nice incentive for employees to contribute to the plan. 

But this isn't reality for everyone. Let's take a quick look at some of the alternatives if you find yourself working for an employer that doesn't match retirement contributions.  

1. Max your Roth IRA every year

This is the big one. For a variety of reasons -- including the very likely possibility that tax rates will rise in the future -- a maximum contribution to a Roth IRA should be top of mind for all retirement savers. Remember, money contributed to a Roth IRA is taxed at today's rates on its way into the account. But once you've made the contribution and invested it, you'll never pay tax again -- even when you withdraw the money in retirement. 

If you make too much money to contribute directly to a Roth IRA -- there are pesky income limitations -- there's always the option of completing a Backdoor Roth IRA contribution. This is simply a legal workaround to maximize the amount of tax-free Roth money you have at your disposal from now until retirement. 

2. Use your HSA as a retirement account

If you're lucky enough to have access to a Health Savings Account (HSA) and are able to fund your current medical expenses with other money, your HSA can be used as an extension of your Roth IRA. Your HSA is additional tax-exempt space that can be used as a retirement vehicle.

Most HSA plans will allow you to invest the balance beyond a certain cash reserve requirement. If you view your HSA as a retirement account, it's a great place to store a pure stock index fund and let it grow as long as possible. While the contribution limits aren't particularly high -- $3,600 for individuals, $7,000 for families -- it's still an opportunity to expand the portion of your net worth that will ultimately be tax-free in retirement. 

Person in piggy-bank-shaped balloon.

Image source: Getty Images.

3. Solo 401(k)

This is where things can get a bit interesting -- especially with changing workforce dynamics. If you're self-employed, you have the opportunity to create your own 401(k) plan, even if you also hold down a full-time job. 

The main hurdle is that you'll need to fill out a fair amount of paperwork to adopt the plan. But once it's set up, you'll potentially have the opportunity to contribute up to $58,000 to the plan, depending on your earnings. Specifically, you'll have annual maximums of $19,500 in employee contributions and up to another $38,500 in employer contributions. Remember that when you're self-employed you're both the employer and the employee, so be sure to categorize contributions correctly if you go this route. 

One final point of caution: In 2021, $19,500 is the annual maximum that an employee can contribute to 401(k) plans. This means that if you contribute to a 401(k) at your full-time job, it will count against the amount you're able to contribute to a Solo 401(k) plan as an employee. You'll still be able to make full employer contributions. 

4. Real estate

While this is not saving in the traditional sense, a long-term commitment to owning your primary home can provide some advantages, particularly:

  • Gains of up to $250,000 ($500,000 for MFJ) are shielded from capital gains tax. It's likely that new tax laws will come down harder on capital gains, so this is one way to shield some accumulated profits.
  • Annual tax deductions through mortgage interest and property taxes. Although they're limited, it's an additional benefit that you won't receive if you're renting. Mortgages at extremely low rates make a lot of sense in many circumstances.
  • The potential for long-term appreciation. It doesn't mean that you'll definitely be rich if you buy a home, but it does mean that if your employer doesn't offer a matching contribution, you might consider diverting funds to a potentially advantageous asset.

5. Use taxable accounts 

If you're in the fortunate position to have maxed out all of your retirement accounts and already own a home, you can invest in a taxable brokerage account. You'll pay tax on any dividends or interest received, as well as on any short- and long-term capital gains derived from selling stock. Note that if you rebalance your portfolio using your taxable account as opposed to your tax-deferred accounts (401(k)s and pre-tax IRAs), you'll be subject to taxation. Be sure to exercise caution in this space.

Five of many

There are really an unlimited number of ways to invest beyond the traditional 401(k) and a corresponding match. You'll never be constrained by these five choices, but each represents another potential avenue to explore. A dynamic financial plan hitting each of these areas in unison is one that's likely to do well in the future, so always take care to evaluate your financial life in its totality.

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