Making Better Financial Decisions

How To Invest Money For Your Retirement Without A 401K

by Glen Hawkins

Does your employer offer a 401k? While many do, there are still many who do not. If you do not have access to a 401k at your job, where should you invest your money for retirement? Some people do not save money for retirement, and they might end up without any cash to use when they finally stop working. Others, though, find alternative ways to invest for retirement. If you need some help with this, talk to a financial advisor. They might recommend using the following options.

Individual Retirement Account

People without employer-sponsored plans often turn to individual retirement accounts (IRAs) for retirement investing. IRAs come in two forms. The most common is the traditional IRA, but you can also invest in a Roth IRA. While these two types have differences, the main difference is the way you pay taxes on the income.

With a traditional IRA, you defer your taxes until retirement when you take the money out of the account. The benefit of this is that you get to include your contributions as write-offs on your tax returns. As a result, you pay fewer taxes when investing in your IRA. You pay your taxes only when you take withdrawals from the account. A Roth IRA does not offer the same tax benefits. Instead, you pay taxes on the income now, but you do not pay taxes on the money when you take withdrawals during retirement.


Another option you could invest in is an annuity. An annuity is a life insurance product. You invest money into the fund while you are younger. When you retire, you can take the money out to use for your retirement income. The benefit of this is that it also offers tax deferment. You do not pay taxes on the money now; instead, you pay taxes when you retire and withdraw money.

Mutual Funds, Stocks, and Bonds

Many financial advisors also recommend investing in mutual funds, stocks, and bonds. While you do not receive tax benefits from these investment types, they allow you to save money and earn profits on your investments. You can earn high returns if you choose the right investments to use for saving money, and an advisor can help you choose which ones to use.

Everyone has a unique situation, which is why you should talk to a financial advisor for advice. They can explain all the available options and help you choose the right ones.