How Do I Save for Retirement if My Employer Doesn’t Offer a 401(k)?

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Common financial advice tells you to start saving for retirement as soon as you start working, but that’s not easy for all workers. Some jobs have a waiting period of six months or a year before you can start saving in their 401(k) plans. Smaller companies or start-ups might not offer retirement plans at all. You're also responsible for your own benefits if you're an independent contractor or self-employed. You may be wondering how to start saving in those cases.

Key Takeaways

  • You can set up an IRA on your own through a brokerage and with some banks. You don't need a cooperating employer.
  • There are some IRAs and 401(k) plans if you don't work for an employer because you're self-employed.
  • You can save for retirement with other investments that don't have income limits or early withdrawal rules.
  • You might want to think about changing jobs if you've been with your current employer for several years with no benefits offered.

Think About an IRA

An IRA is a great option if your employer doesn't offer retirement benefits. You can set one up with most brokerages and with some banks, choosing the type of investments you want to make. A financial adviser can help you decide on the best options for you.

The savings limit for IRAs for tax year 2022 is $6,000 annually, increasing to $6,500 in 2023. It goes up to $7,000 and $7,500 respectively for those who are age 50 and older. Don’t give up if $500 per month seems like too much for your budget to handle. You can work to increase your savings amount each year until you can contribute up to the limit.


Many firms are willing to waive the start-up investment requirement if you set up an IRA with a monthly savings amount. You also could consider using a robo-advisor that will manage an IRA for you.

You have the option of choosing a Roth or a traditional IRA. Your contributions are tax deductible, and the money grows tax free in a traditional IRA. You'll pay income taxes when you take the money out in retirement.

Your savings to a Roth IRA aren't tax deductible, but you won't be taxed on the money and its earnings when you take it out. That can be a huge benefit if you start saving at a young age. You're only eligible to contribute to a Roth IRA in 2023 if you make less than $153,000 per year if you’re single, or $228,000 if you're married and you and your spouse file a joint tax return. These limits are up from $144,000 for individuals and $214,000 for married couples in 2022.

Both Roth and traditional IRAs are great investment options, but a Roth can be a better choice if you expect to be in a higher tax bracket when you stop working. A traditional IRA can be a better choice if you expect to be in a lower tax bracket when you retire.

Self-Employment Options

You can enroll in a SEP IRA or a solo 401(k) plan if you're self-employed or an independent contractor.

SEP IRA is also a tax-advantaged retirement savings tool. Your pre-tax money is invested tax-deferred until you take it out when you stop working. One major benefit of a SEP IRA is the high contribution limit. It's $61,000 in 2022, increasing to $66,000 in 2023, not to exceed 25% of your income.


Talk to your accountant about the best options for your retirement savings so you can take advantage of as many tax breaks as possible.

Think About Switching Jobs

You may be willing to do without benefits when you start working if your goal is to gain experience, or because you really believe in a company. Some start-ups may not have retirement plans in the first few years, but they might plan to offer them later. You may want to think about switching jobs to a more established company to make the most out of your savings if you've been where you are for years with no change in benefits.

Investing Outside of Retirement Accounts

You don't have to stop saving for retirement just because you reach your maximum allowed savings for the year. You can save with other investments. It doesn't have to be an official retirement account.

In fact, you'll want to have a good portion of your benefits in separate accounts if you're planning on retiring early, so you can access the money without being hit with an early withdrawal penalty. You aren't allowed to take money from either an IRA or a 401(k) without a 10% penalty until you reach age 59½ but there are a few exceptions.

You may want to retire sooner than that. Other investments will allow you to withdraw money before age 59½ to avoid the penalties.

Take Advantage of Other Benefits

Start-ups may offer other options, such as buying stock options instead of contributing to a retirement account. This can allow you to benefit from the growth of the company in the first few years. It can be a good option when it's managed right.


Make sure your portfolio is highly diversified. A start-up could fold without warning. Owning this type of stock is riskier.

There are also rules for how soon you can sell your stock after purchasing it, so this should not be your whole retirement plan. These rules can vary by company.

Some companies offer deferred compensation programs that allow you to defer pay until some future date, such as when you retire. This option lets you reduce your taxable income now. You'll save money on income taxes, earn interest on the money, then take the money as either a lump sum or over a period of time when you decide you want it.

The rules for participating in such a program and for how these programs are operated can be tricky. Consult with a qualified retirement planning specialist before you enroll.

Frequently Asked Questions (FAQs)

Can you open a 401(k) account without an employer?

You can open a self-employed 401(k) on your own, but these accounts are only for the self-employed. You can only open a self-employed 401(k) if you're a small business owner who has at least one employee other than a spouse.

How much should I save in my 401(k) or other retirement accounts?

Everyone has to decide what amount of savings is right for their financial situation, based on factors like their standard of living and their target retirement age. As a general rule of thumb, people might aim to set aside 10% to 20% of each paycheck.

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  1. IRS. "Retirement Topics—IRA Contribution Limits."

  2. IRS. "Amount of Roth IRA Contributions That You Can Make for 2023."

  3. IRS. "2022 Limitations Adjusted as Provided in Section 415(d), etc.," Page 4.

  4. IRS. "SEP Plan FAQs."

  5. IRS. "SEP Contribution Limits (Including Grandfathered SARSEPs)."

  6. IRS. "Retirement Topics—Exceptions to Tax on Early Distributions."

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