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4 Ways to Save for Retirement Without a 401(k)

4 Ways to Save for Retirement Without a 401(k)

October 18, 2022

You are not alone if you do not have access to a 401(k) retirement plan. Pew Research data reveals that 35% of private-sector employees do not work for an employer that offers a plan.1 Fortunately, other retirement savings options are available, some of which provide similar tax benefits as a 401(k). Here are four ways you may save for retirement without a 401(k) plan.

Individual Retirement Accounts

Both traditional individual retirement accounts (IRAs) and Roth IRAs may provide a valuable source of retirement funds.

  • Traditional IRAs function much like a 401(k). In exchange for an up-front tax break through a reduction in your taxable income, you get to defer taxes on any amount withdrawn from the account after retirement. You may be able to make early withdrawals under certain circumstances, like a 401(k); however, you may pay an early withdrawal penalty.
  • Roth IRAs are the inverse of traditional IRAs. The funds contributed to a Roth IRA are post-tax, so you do not have to pay federal or state income taxes on any earnings you withdraw later. After establishing your account for a minimum of five years, you may withdraw Roth IRA contributions for any reason, penalty-free.2

Although the contribution limits for traditional and Roth IRAs are not as high as those for 401(k)s, these accounts may help supplement your retirement while providing you with certain tax benefits.

I Bonds

Government-issued savings bonds, like Series I Savings Bonds, provide a low-risk savings vehicle that may help combat the effects of inflation. These savings bonds earn interest by combining a fixed rate and an inflation rate tied to the inflation index that updates twice per year.

Each person may purchase up to $10,000 in I bonds each year.3 An I bond earns interest for 30 years unless cashed in. You need to hold any I bond for at least one year. You lose the last three months of interest if you cash one before five years. More information on I Bonds can be obtained at

Health Savings Accounts

Health Savings Accounts (HSAs) provide a tax-free way to save for health care expenses. Still, with more and more HSA custodians offering investment options, these accounts might provide some extra retirement income. Unlike "use it or lose it" flexible spending accounts, HSA funds never expire. As long as the funds pay for qualified medical expenses, they are tax-free going in and coming out. This double tax benefit makes HSAs worth considering even among other tax-advantaged retirement plans.

Once you are 65 or if you become disabled, you may withdraw HSA funds penalty-free. Although any amount withdrawn is taxable as income after age 65, hanging on to an HSA account may provide an additional source of retirement income.

Tax-Deferred Annuities

Another way to save for retirement is to purchase a tax-deferred annuity. Much like pensions, annuities provide a regular source of income. Purchasing an annuity may give you a steady retirement income without dealing with market fluctuations or being forced to withdraw funds during a market slump.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Series I bonds are guaranteed by the US government as to the timely payment of principal and interest and offer a fixed rate of return and fixed principal value. Minimum term of ownership applies. Early redemption penalties may apply.

Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Withdrawals prior to 59 ½ may result in an IRS penalty, and surrender charges may apply. Guarantees are based on the claims-paying ability of the issuing insurance company.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05313101.


1 Here's how many Americans don't have access to a 401(k) plan, CNBC,

2 How To Use Your Roth IRA as an Emergency Fund, Investopedia,

3 Series I Savings Bonds, TreasuryDirect,