Some businesses do not offer a 401(k) plan for their employees. In this situation, you may be wondering what the next step is to save for retirement. There are a lot of different ways in which you can begin to save for retirement. This article will help you decide which is the best way for you to start saving for your retirement.
Open An IRA
An IRA is an Individual Retirement Account. There are different IRA’s that you can shop around for. The most common IRA is a Roth-IRA. A Roth-IRA acts the same way as a traditional IRA except it is taxed differently. The money you put into an IRA is tax-deferred before you put it into the account. Therefore, when you do take the money out of an IRA, you will have to deduct taxes from the money before you are able to use it. A Roth-IRA is taxed in the complete opposite way than a regular IRA. The money you put into a Roth-IRA is already taxed. Therefore the money in the account is the exact amount you can use. Some IRA’s have an age requirement to when you can access the money in the account. A typical age requirement is 59.5 years old to access money in an IRA account.
There are ways to still utilize a 401(k) plan without the help of a business. A solo 401(k) has different guidelines than IRA’s or businesses who offer a 401(k) plan. A solo 401(k) plan forces you to make recurring and substantial deposits to the account. These guidelines give you less flexibility in regards to how much you want to save and how much you want to put into the account. The option of a solo 401(k) could be an attractive alternative for individuals who want to be aggressive with saving their money. A solo 401(k) will also overreach the max amount you can put into other retirement accounts.
If you have maxed out the money in your IRA account and are still looking to save money for retirement consider a taxable brokerage account. These accounts allow you to invest your money in the market and take advantage of investments. Unlike retirement accounts, the money you earn through a brokerage account is taxed. Opening a brokerage account is a great way to continue saving for retirement once you have maxed out your savings amount in an IRA or any other retirement plans.