Best Places to Invest if Your Employer Doesn't Offer a Retirement Plan

We hear a lot about the value of employer-sponsored retirement plans, but what if you're self-employed or your employer doesn't offer such a plan? Here are some of the best options currently available.

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Traditional IRA

Depending on your income, your contributions to a traditional IRA may be fully tax deductible for the year that you make them, allowing your investments to grow tax-deferred until retirement. You'll only pay taxes on the money when it's withdrawn. You can easily open a traditional IRA through a conventional broker, online broker, robo-advisor, bank, or credit union.

The maximum amount you can contribute in 2025 to a traditional IRA is $7,000 if you're under 50. That number increases to $8,000 if you're 50 or older.

Roth IRA

With a Roth IRA, you contribute post-tax income (money you've already paid taxes on) and watch your investments grow tax-free. And since you've already paid taxes on your contributions, you won't owe more taxes on your withdrawals in retirement.

The annual contribution limits for a Roth IRA are the same as for a traditional IRA. But importantly, those limits apply across all of a person's IRAs; the sum total of your annual contributions to all such accounts in 2025 can't exceed $7,000 if you're under 50 or $8,000 if you're 50 or older.

Moreover, there are income limits regarding who can contribute to a Roth. In 2025, single tax filers can make a full contribution to a Roth IRA only if their modified adjusted gross income (MAGI) is less than $150,000, while joint filers must have a MAGI of less than $236,000.

Solo 401(k)

If you're self-employed or run a small business, there's nothing quite like a solo 401(k) for building your nest egg. You can maximize your investments and tax savings potential because you're both the employer and the employee. Here's a breakdown of the maximum aggregate amounts that the self-employed or small business owner can contribute annually to a Solo 401(k):

• Under 50: Up to $70,000.
• 50 to 59: Up to $77,500.
• 60 to 63: Up to $81,250.
• 64 or older: Up to $77,500.

Beyond those absolute maximums, however, there are limits for individuals' Solo 401(k) contributions that are based on two factors. As an employee (as long as the amount doesn't exceed your compensation), you can contribute:

• Under 50: Up to $23,500.
• 50 to 59: Up to $31,000.
  
• 60 to 63: Up to $34,750.
• 64 or older: Up to $31,000.

As an employer, you can also contribute up to 25% of your compensation (after Social Security and Medicare taxes). As such, your real contribution cap may be lower than the maximum aggregate amount for your age.

SEP IRA

A Simplified Employee Pension (SEP) IRA is also designed for self-employed individuals and small business owners. The primary draw for such accounts is their high contribution limit.

The contribution limit for 2025 for a SEP IRA is the smaller of $70,000 or 25% of your compensation. So if, for example, your small business earns $150,000, 25% of your compensation would be $37,500. Since that amount is smaller than $70,000, that would be your contribution limit for the year.

Health Savings Account (HSA)

If you currently have a high-deductible health plan, the money you invest in an HSA helps pay for medical care and can act as a tax-advantaged savings plan for retirement.

If your health coverage is on you alone, you can contribute up to $4,300 to your HAS for 2025. If your high-deductible health plan covers your family, the contribution limit is $8,550.

Unlike the money contributed to a flexible spending account (FSA), there's no "use it or lose it" rule with an HSA. Unused funds just roll over from year to year. Even better, you can invest the funds held in those accounts just as you can with retirement-focused accounts, putting the money into stocks, bonds, exchange-traded funds, or mutual funds that can grow it over time.

Taxable investment accounts

You can always invest in an ordinary, non-tax-advantaged brokerage account. And while, unlike the situation with most 401(k)s, your employer won't match a portion of your investments through a brokerage account, you'll have access to far more investment options, more control over the fees you're willing to pay, and no restrictions on when you can (or must) withdraw money.

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