How to Save for Retirement without 401K?

While discussing financial matters, it is common to hear the statement “How to increase your 401k”. If you run your small business, are self-employed, or if you don’t have a retirement plan, you may be wondering how to save for retirement without 401k? The good news is that there are several ways that you can save for early retirement without relying on a 401k plan. If you wish to retire by the age of 37, this article will detail some of the ways that could help you build a nest for your eggs.

Ideas on How to Save for Retirement without 401k

If you plan to retire early, you need not worry about not having a 401k plan in place. There are other alternatives that allow you to save your money for retirement. Moreover, you will not have to worry about the 10 percent penalty that early retirees are charged for withdrawing from traditional 401k plans before the age of 55. Here are some of the best 401k alternatives.

Small Business Investment

Investing in a small business is one way of saving for retirement without 401k. You need to know that investing in a small business not only mean that you are the business owner. You could also invest in a company that has already been established, usually as a silent partner. If you venture into small businesses as a means to save for retirement without 401k, you should know that the profits are not limited. This implies that its ROI is usually higher than other saving options.

This alternative, however, involves a lot of risk. How is that so? You have no guarantee whatsoever that the amount you have invested in the small business will bring returns to the investor(s) and owner. Nonetheless, this is a substantial idea on how to save for retirement without 401k.

Brokerage Accounts

If you intend to retire in your late thirties and have been wondering how to save for retirement without 401k, you could consider a brokerage account as an alternative. These accounts provide you with a number of investment options such as mutual funds, money market funds, exchange traded funds, individual stocks and bonds, and certificate of deposit, among others.

Some brokerage account investment options can earn more than a 401k such as mutual funds, while others such as money market funds tend to be moderate but beneficial in your retirement. You can get a brokerage account via a licensed broker, specific banks, financial advisers, and online platforms. Brokerage accounts are a viable option that you can consider because the tax rates in the long-term capital gains is usually lower than the ordinary income tax rates for those that invest in these accounts.

Saving in a SEP

A Simplified Employee Pension (SEP) is a viable alternative for saving for retirement without 401k. This retirement account can be utilized by small business owners or self-employed individuals. If you are considering this alternative, you can contact a bank, an investment firm, or a brokerage firm to set up an account. As a business owner, you can contribute up to 25 percent of your earnings and a maximum of $53,000. Those who are self-employed can contribute up to 20 percent of your net earnings.

If you are wondering how to save for retirement without 401k, this is the third option to consider. You should know that the contributions you make grow tax-deferred and they are tax deductible. The contributions that you make in this account are free from income taxes up until the point you will withdraw them during retirement.


In Individual Retirement Accounts (IRA) is also another alternative of how to save for retirement without 401k. An IRA is a retirement savings account that has some enticing tax benefits. There are two types of IRA that include Roth IRA and traditional IRA. These accounts can be opened by anybody who is earning some income. In 2017, you can contribute up to $5,500 in your IRA.

A traditional IRA allows you to claim tax deductions the year that you make your contributions. On the other hand, a Roth IRA does not give you a tax deduction. If you have a Roth IRA, you can withdraw some amount from the account tax-free. This is possible because your contributions have already been taxed. An IRA is a viable option for anyone with an earned income, including anyone who has a spouse that earns an income. Note that an IRA has a lower contribution limit compared to other retirement accounts.


A SIMPLE IRA is another alternative for saving for investment, especially for those individuals that are self-employed. This retirement account provides you with pretax contributions and tax-deferred. It also includes an employer match and an employee contribution.

If you are an employee and you intend to use this retirement account, you can contribute up to 100 percent of your earnings. As of 2017, you are can contribute up to $12,500. On the other hand, an employer is expected to make a 3 percent matching contribution or a 2 percent non-elective contributions. Any employer opting for this account should know that the 2 percent non-elective contribution does not depend on the employee contribution in order to take place. A SIMPLE IRA is an ideal plan for businesses that employ less than a hundred employees. It involves no tax forms to be filed, and it provides salary deferrals.

Saving without 401k to Retire Early

A substantial percentage of full-time workers have taken up retirement plans, and the majority go with the 401k retirement plan. If you are self-employed or run your own business, you may be worrying about a possible alternative to save for your retirement. This is especially true if you plan to retire in your late 30’s.

Early retirees often encounter the challenge of accessing their traditional accounts without facing the penalties. Therefore, instead of going for a traditional 401k plan, you could go for a Roth account. With a Roth IRA, you can withdraw your contributions from the account at any time. This does not imply tax deductions or penalties. If you intend to save with a Roth account, keep in mind that these accounts have income restrictions. In 2017, the income restriction for a single person is $133,000 per annum and $196,000 for married couples.

An early retiree may also consider taxable accounts as alternatives to the 401k plan to save for retirement. Such accounts include real estate investments, certificates of deposit, and individual stocks and bonds. With taxable accounts, the contributions you make are yours after the taxes.

Recommended read: Roth vs 401k – Which is Right for You?


Besides the traditional 401k retirement plan, there are other retirement accounts that you could consider to save for your early retirement. Some of the alternative retirement plans include SIMPLE IRA, IRA, SEP, brokerage accounts, and small business investments. These retirement accounts are accessible to individuals who are self-employed, those with an earned income, and business owners. If you were wondering how to save for retirement without 401k, those are some of the possible alternatives. Have you tried any of the aforementioned retirement plans? If you have, share your experience and thoughts, and feel free to ask any related questions.

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