Dear Olga: Retirement Savings Without a 401k

Dear Olga,

Can you give me tips to start planning for retirement when my full time job does not provide me with a retirement plan?

Thank you,

FBR

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Dear FBR,

I recently explored how many employers provide 401k plans in a blog post and about only 56% of employers actually provide a 401k account as a benefit for their employees. I'm glad you asked this question, because you're not alone.

For those folks who don't have a 401k plan provided by an employer or you're a freelancer, there is a similar option called an IRA. The yearly limit for 2019 to contribute to an IRA is $6,000 per year, which is significantly less than the $19,000 limit for 401k accounts. However being able to take advantage of similar savings incentives is better than nothing.

Even if you don't have the same limit as a 401k account holder you can still save a substantial amount. Here is an infographic from Fidelity to give you an idea:

This hypothetical example assumes the following: (1) annual IRA contributions on January 1 of each year for the age ranges shown, (2) annual $6,000 contribution for first year and thereafter, (3) an annual rate of return of 7% and (4) no taxes on any earnings within the IRA. The ending values do not reflect taxes, fees, or inflation. If they did, amounts would be lower.

You can open an IRA account through most financial institution like your bank or investment companies like Charles Schwab and Etrade.

I hope this gives you a good place to start. If you need more ideas, feel free to write in again.

Good luck!

Olga

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