How to Save for Retirement Without a 401(k)

Traditional IRA

A traditional individual retirement account (IRA) is a retirement account you can open and fund yourself through a bank, credit union, brokerage firm or mutual fund provider. A traditional IRA provides basic tax-advantaged retirement savings with tax-deductible contributions and tax-deferred earnings.

Contribution Limits

The 2025 IRA contribution limit is $7,000 with an additional $1,000 catch-up contribution if you're age 50 or older.

Tax Rules

• Contribute pretax dollars: A contribution to your traditional IRA may be tax-deductible in the year you make it.
• Your deduction eligibility may phase out: If you or your spouse have a workplace retirement plan, you'll need to meet IRS income requirements to deduct your contribution to a traditional IRA.
• Earnings are tax-deferred: You don't pay taxes on any interest, dividends or capital gains you earn as your money grows,
• Early withdrawals are penalized: You may pay income taxes plus a 10% early withdrawal penalty if you withdraw funds before age 59½.
• Distributions are taxable in retirement: You'll pay ordinary income taxes on your money when you withdraw it in retirement.
• You must take withdrawals at 73: You are required to take required minimum distributions (RMDs) from your traditional IRA beginning at age 73.

Who It's Best For

A traditional IRA works great for anyone looking to save beyond their 401(k) contribution limit—or save without a 401(k). Contributing pretax dollars saves you money on taxes now, but you'll pay taxes on your full distributions in retirement. If you think your tax bracket will be lower in retirement, a traditional IRA might be for you.

Opening a traditional IRA is easy: These accounts are widely available at banks, credit unions, brokerages and mutual fund providers.

Roth IRA

A Roth IRA is similar to a traditional IRA, but it has different tax rules for contributions and withdrawals. Contributions to a Roth are not tax deductible, but your qualified withdrawals are tax-free, which may give more flexibility to your retirement tax planning.

Contribution Limits

You can contribute $7,000 to a Roth IRA in 2025, with a $1,000 catch-up contribution if you're age 50 or older.

Tax Rules

• Contribute after-tax dollars: Your Roth IRA contributions are not tax deductible.
• Meet income requirements: To contribute to a Roth, your income can't exceed IRS limits. Roth eligibility begins phasing out at $150,000 for single taxpayers and $236,000 for married couples filing jointly.
• Earnings are tax-free: Your capital gains, interest and dividends aren't taxable as your money grows.
• Distributions are also tax-free: Qualified withdrawals made in retirement are also not taxable.
• No penalty for withdrawing contributions: Though you may pay a penalty for withdrawing your Roth earnings before age 59½, you can withdraw your contributions penalty-free at any time.
• No required minimum distributions: You can leave your money in your Roth for as long as you'd like.

Who It's Best For

Roth IRAs are a great complement to traditional IRAs and 401(k)s. Though you don't get immediate tax savings by deducting your contributions, your money grows tax-free for as long as it stays in your account—and when you withdraw it.

A Roth IRA gives you flexibility. You can withdraw your original contributions without tax or penalty. You don't have to take RMDs. And you can use tax-free Roth distributions to help manage your tax bill in retirement, when distributions from your traditional IRA and 401(k) are fully taxed.

Learn more: Can You Have Multiple IRAs?

SEP IRA

A SEP IRA is a tax-advantaged retirement plan for self-employed people, business owners and their employees. A SEP IRA functions as a business-wide retirement plan for all employees, even if you're the only employee you have. The IRS has detailed rules for setting up and maintaining SEP IRAs. Here are a few to consider:

• You must open an individual SEP IRA account for each employee.
• All SEP IRA contributions are employer contributions.
• No employee matching is allowed.
• The contribution rate must be the same for all employees.
• Contributions can vary from year to year.

Contribution Limits

Contributions can't exceed the lesser of:

1. 25% of an employee's compensation, or
2. $70,000 for 2025, with the contribution limit adjusting annually for inflation

There are no catch-up contributions for a SEP IRA.

Tax Rules

• Contributions are tax deductible on your business tax return.
• Distributions are taxed as ordinary income.
• Early withdrawals before age 59½ may be subject to income tax and a 10% penalty.
• RMDs begin at 73.

Who It's Best For

A SEP IRA is for business owners and sole proprietors who want their own workplace retirement plan. SEP IRAs have substantially higher contribution limits than regular IRAs, which can help jump-start your retirement savings. However, be aware that all contributions are made by the employer, and the same rate goes for everyone. If you contribute 25% to your SEP IRA, you must make the equivalent contribution for each qualifying employee.

Learn more: Ways to Save for Retirement When You're Self-Employed

SIMPLE IRA

A savings incentive match plan for employees, or SIMPLE IRA, is a retirement savings plan for businesses with 100 or fewer employees. A SIMPLE IRA lets employees—including the business owner—contribute to their own accounts with either a dollar-for-dollar employer match or a nonelective employer contribution.

Here are a few SIMPLE IRA basics:

• Your business must have 100 or fewer employees.
• You can't maintain any other employer-sponsored retirement plans.
• Employees can contribute to the plan through salary deferrals.
• Employers must match employee contributions dollar for dollar, up to 3% of annual compensation, or make a 2% nonelective contribution for every employee earning $5,000 or more.
• Employers must contribute at the same rate for every employee who makes $5,000 or more, including the business owner.
• Employees are always 100% vested, without a waiting period.

Contribution Limits

• Employees may defer up to $16,500 in 2025.
• Employees age 50 or over can make catch-up contributions of up to $3,500.
• Employers must either match employee deferrals, up to 3% of compensation, or make a 2% nonelective contribution on behalf of every employee who makes at least $5,000.
• Under the SECURE Act 2.0, some SIMPLE accounts have higher contribution limits: $17,600 for employee deferrals with a $3,850 catch-up contribution. The higher limits apply to employees of companies with 25 or fewer employees, or companies with 26 to 100 employees where the employer increases the employer match to 4% or nonelective contributions to 3%.
• Employees ages 60, 61, 62 and 63 in 2025 can make a larger catch-up contribution of $5,250 under a special provision of SECURE 2.0.
• Qualifying employers can make an additional nonelective contribution of up to $5,100 or 10% of employee compensation in 2025.

Tax Rules

• Tax-deductible contributions: Contributions are made with pretax dollars.
• Tax-deferred growth: Earnings aren't taxed as your money grows.
• Taxable distributions: You pay ordinary income tax on your withdrawals when you retire.
• Early withdrawal penalty: A 10% penalty typically applies when you withdraw funds before age 59½.
• Additional penalty for new participants: An additional 15% penalty applies when you withdraw funds before at least two years of participation have passed.
• RMDs apply: RMDs begin at 73.

Who It's Best For

SIMPLE IRAs allow business owners with 100 employees or fewer to offer basic retirement savings with either dollar-for-dollar or flat-rate employer matching. Contribution limits are lower than for comparable SEP IRA plans, but employee contributions (versus employer-only contributions for a SEP) and employer matching may work better for some small employers.

Solo 401(k)

Solo 401(k)s are designed for business owners who don't have employees. They have the same requirements and rules as regular 401(k)s, with generous contribution limits of up to $70,000 ($77,500 if you're over 50). If you've been longing for 401(k) benefits to call your own, this may be the plan for you. You can open a solo 401(k) through an investment brokerage.

Contribution Limits

• As an employee, you can contribute up to $23,500 in 2025.
• As the employer, you can contribute up to 25% of your compensation. If you're self-employed and are not set up as a corporation, your earned income is equal to your net earnings minus half of your self-employment tax and the contributions you made for yourself.

In total, your combined contributions for 2025 cannot exceed $70,000. If you're 50 or older, you can contribute an extra $7,500.

Tax Rules

• Contribute pretax dollars: Your contributions are tax deductible, as they are with a traditional 401(k).
• Pay taxes on distributions: Your withdrawals are taxed as ordinary income.
• Early withdrawals are penalized: You typically pay a 10% penalty plus income taxes when you withdraw funds before age 59½,
• Required minimum distributions: RMDs begin at age 73.

Who It's Best For

A solo 401(k) provides essentially the same benefits as any 401(k), which may be just what you're looking for. High contribution limits make a solo 401(k) stellar for maximizing your savings.

Learn more: SEP IRA vs. Solo 401(k): Which is Better?

Brokerage Account

A brokerage account allows you to save for all types of financial goals, including retirement. It doesn't offer the tax benefits you get with a 401(k) or IRA, but it doesn't have contribution limits or early distribution penalties either.

You can open a taxable brokerage account through an investment brokerage, then fund it and purchase securities as you please. These can include individual stocks, exchange-traded funds (ETFs), mutual funds and more.

Learn more: How Much Do You Need to Open a Brokerage Account?

Contribution Limits

None

Tax Rules

• No special tax treatment: Unlike IRAs and health savings accounts, brokerage accounts don't offer tax breaks, even when you're using them to save for retirement.
• Capital gains taxes: You'll pay taxes on short-term and long-term capital gains as you earn them.
• Taxes on interest and dividends: If you earn interest or dividends on your investments, these are taxable as well.
• No restrictions on withdrawals: You can withdraw money whenever you like without penalties. There are no RMDs on brokerage accounts.

Who It's Best For

A taxable brokerage account can be a great place to save for retirement alongside tax-advantaged IRAs. Though you won't get the tax benefits of an IRA, you will have the flexibility to contribute as much as you want and withdraw money whenever you'd like.

Investments have the potential to out-perform more conservative vehicles like savings accounts and certificates of deposit (CDs). Although you don't need to be an expert to start investing, having access to a broker or financial advisor to guide you can help if you're new to investing.

Health Savings Account (HSA)

Health savings accounts (HSAs) are tax-advantaged accounts you can use to save and pay for qualifying health care expenses. HSAs aren't officially used for retirement savings, but they have specific tax benefits worth considering.

HSAs offer double tax savings: You can deduct your HSA contributions and withdraw funds tax-free when you use the money to pay for qualifying health care expenses. This double benefit is unique to HSAs, and it makes them an especially advantageous place to save.

Two things to know:

• If you spend HSA funds on non-qualified expenses, you'll pay ordinary income tax on the distribution plus a 20% penalty. When you reach age 65, the penalty no longer applies. However, you'll still pay taxes on your non-qualified withdrawals.
• You may want dedicated funds to pay for health care in retirement. According to Fidelity's 23rd annual retiree cost estimate, a 65-year-old who retired in 2024 can expect to spend $165,000 in health care and medical expenses throughout retirement.

To qualify for an HSA, you must be covered by a qualifying high-deductible health plan (HDHP).

You can find HSAs at some banks, credit unions and brokerages, or from online HSA providers.

Tip: In 2025, the IRS defines an HDHP as having an annual deductible of at least $1,650 for self-only coverage and $3,300 for family coverage. Out-of-pocket expenses (deductibles, co-payments and other qualifying expenses, excluding premiums) can't exceed $8,300 for self-only coverage and $16,600 for family coverage.

Contribution Limits

If you have an HDHP with self-only coverage, you can contribute up to $4,300 in 2025. If you have family coverage, you may contribute up to $8,550.

Tax Rules

• HDHP requirement: You must be insured by a qualifying high-deductible health plan.
• Fund with pretax dollars: HSA contributions are tax deductible up to IRS contribution limits.
• Separate contribution limits from your IRA: You can contribute to both an HSA and an IRA in the same year; contribution limits don't overlap.
• Tax-free distributions: Withdrawals from an HSA are tax-free as long as funds are used to pay for qualifying health care expenses.
• Penalties on non-qualified withdrawals: Non-qualified withdrawals incur a 20% penalty and are taxable as ordinary income.
• No penalties after 65: At 65, you can withdraw money from an HSA without penalty, but you'll pay taxes on funds if you don't use them for qualifying health care costs.

Who It's Best For

If you have a qualifying HDHP, contributing to an HSA is an excellent way to save for health expenses you incur, both now and in retirement.

Learn more: Mistakes to Avoid When Using an HSA for Retirement

Tax-Deferred Annuities

An annuity is a contract between you and an insurance company that can provide guaranteed payments over a period of time, sometimes for life. Because annuities have tax benefits, they're often used to save for retirement, either in or out of a regular retirement account.

There are two common types of annuities:

• Qualified annuities are purchased with pretax dollars. They're often held in retirement accounts, such as IRAs and 401(k)s.
• Non-qualified annuities are purchased with after-tax dollars and are usually held outside retirement accounts.

Contribution Limits

• If held within a retirement account, annuities follow contribution limits on the account. For example, an annuity held in a traditional IRA has an effective annual contribution limit of $7,000.
• If held outside a retirement account, annuities have no contribution limits.

Tax Rules

Annuities are tax-deferred: You don't pay taxes on any interest or gains you make in the year you make them. Instead, you pay taxes on either your full distribution or your earnings when you receive a payment. Tax treatment varies depending on the type of annuity and how it's held:

• Qualified annuities held in a traditional IRA are generally taxed as traditional IRAs:

  • Contributions are tax deductible.
  • Distributions are fully taxed as ordinary income.
  • Early withdrawals trigger a 10% penalty tax.
  • RMDs begin at age 73.

• Annuities held in a Roth IRA are taxed according to Roth IRA rules:

  • Contributions are not tax deductible.
  • Qualified distributions are tax-free.

• Non-qualified annuities held outside of retirement accounts are taxed on earnings only:

  • Contributions are not tax deductible.
  • Only your earnings are taxed when you make a withdrawal.

Learn more: Are Annuities Taxable?

Who It's Best For

Annuities may be worth exploring if you want a guaranteed income stream for life. Annuities are also an option if you've maxed out your contributions to other types of retirement accounts, since annuities aren't subject to IRS' retirement contribution limits.

Tips for Saving for Retirement

Wherever you decide to save for retirement, maximizing your savings takes a concerted effort. Finding room in your budget, setting long-term goals and sticking to them consistently are all key. Here are a few additional tips to get you motivated and keep you on track:

• Understand your retirement goals. How much Social Security will you receive in retirement? How much income will you need? Knowing the answers to these questions (and many more) can help you establish clear goals for your retirement savings.
• Automate your contributions. Once you decide on a monthly retirement contribution that works for your budget, make it automatic. Automatic paycheck deductions are one of the best features of 401(k) plans. You can replicate the benefits by setting up recurring transfers from your checking to retirement savings.
• Increase your contributions over time. Saving 15% of your income for retirement is a common formula that works for people in their 20s and 30s. Once you reach your 40s and beyond, consider increasing your contributions gradually to 20% to help push yourself to reach retirement savings goals faster.
• Don't raid your retirement. Withdrawing funds before retirement could trigger a penalty, but that's not the only reason to keep your hands off. Building a substantial nest egg takes dedication and time. When you withdraw money, you deplete your hard-won savings, miss out on potential stock market gains and diminish the effects of compound interest.

Learn more: Ways to Save More for Retirement

The Bottom Line

Saving for retirement may be the longest financial journey you undertake. You could be saving over the course of a 40-year career—or longer—with the distant goal of achieving financial independence. Every opportunity to grow your money and tax benefit you can claim can get you closer to that goal.

If you aren't sure which options are best for you, consider working with a financial or tax advisor. They can help you navigate the sometimes complicated choices, so you can save consistently and strategically for retirement.