What To Do If Your Company Does Not Offer A 401(k)

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

After the initial interview is done, one of the most important questions prospective employees seek an answer to is whether or not a company offers a retirement savings plan such as a 401(k). For those that do, you're in good shape, and there is no good reason why you shouldn't take advantage of it. But for those that don't, what's your next step? Are you to just turn down the job and look elsewhere? Not necessarily, there are plenty of other ways that you can start saving for retirement, and here's how:

Contribute to a Roth IRA: Roth IRAs are similar to traditional IRAs in the sense that they have the same contribution limits; however, they are taxed differently. The funds that you contribute to Roth IRAs are after-tax dollars, but when you withdraw any amount during retirement, it is done on a tax-free basis.

Use direct deposit: A huge benefit of a 401(k) account is that you don't even really see the money you contribute until it's time to take it out - your contributions are automatically deducted from your paycheck before it's handed to you. Therefore, the effort on your part to save is pretty minimal. The good news? You can mimic this on your own by setting up a savings account (such as an IRA) where a portion of your paycheck can be deposited through direct deposit. Just like with a 401(k), you won't have anything to miss because you won't have to actually transfer funds yourself.

Open a myRA: A myRA is a new type of Roth retirement account that was established back in 2014. In these accounts, the money you save is invested in government securities that will not lose their value. The maximum account balance for this type of plan is $15,000, and you may contribute up to $5,500 each year if you earn less than $129,000 (for individuals) or $191,000 (for married couples).

Have a savings account: Although this will require you to do some money transfers on your own, a savings account is a great way to get started with planning for retirement. Each pay period, determine how much of your paycheck you can live without and transfer it from your checking to your savings account - just make a promise to yourself not to touch it! Since you can withdraw from this type of account at any time it may be tempting, but with a little will power, you'll see things start to add up.

All that said, our best piece of advice if your company does not offer a 401(k) is to meet with a financial planner who can provide you with a strategy that works best for your current financial situation. While a savings account may work for some, a Roth IRA might work better for others, and a financial planner can help you figure out what's right for you.

To learn about the retirement planning services we offer here at American Investment Planners LLC, please give us a call at (516) 932-5130.