No 401(k)? There are options

Q – I’m self-employed. If I want to start saving for retirement but don’t have access to a 401(k) plan what are my options?

A – First, the real benefit of a 401(k) isn’t the tax-deferral (you can get that with a Traditional IRA that anyone with earned income can contribute to, but rather the employer's matching contribution. And, of course, some employers are stingy while others are more generous. This situation can make it harder for a self-employed person to save enough every year, even though the government provides a “Retirement Savings Contributions Credit” for lower incomes. But, if you have the ability to save, you can max out your own ROTH IRA, and then build up an after-tax investment account that you earmark for retirement. Or, if you run a business, there is the potential to set up a Simplified Employee Pension IRA or your own solo-401(k) through various financial service providers. It’s really about the total percentage you’re saving every year, as early as possible, to climb up the retirement hill.