57 Million Americans Face Huge Disadvantage in Retirement Savings

Saving enough money to support yourself in retirement is challenging for most people. After all, you'll need hundreds of thousands, or potentially even millions, of dollars if you want to have enough income to live on once you don't get a paycheck anymore.

Unfortunately, millions of Americans have it harder than others and are at a huge disadvantage. That's because they are lacking one of the simplest and best ways to invest for their future. Here's why.

Image source: Getty Images.

Millions of Americans are missing out on this retirement savings opportunity

According to Pew Research, an estimated 57 million workers in the United States don't have access to retirement benefits at their jobs. This means that close to half of all individuals who are working in the private sector are missing out on a key retirement savings tool.

Not having a workplace retirement plan makes saving for retirement harder in many ways. For one thing, many employers that offer workplace plans provide a 401(k) that comes with an employer match. Matching contributions are free money that workers can collect when they contribute some of their own funds to the account.

Having a workplace plan also makes retirement investing simpler, offers easy access to a tax-advantaged account, and allows you to get tax breaks for contributing larger amounts of money.

That's because you can sign up for an account easily by filling out forms from HR or your plan administrator. In many cases, you'll even be auto-enrolled, so you don't have to do anything at all to begin saving. You can also have contributions taken directly out of your paychecks instead of having to move money over yourself, so the money comes out before you see it.

The contribution limits for a 401(k) are also higher than for other accounts, like an IRA that you can open yourself. For all these reasons, not having access to a 401(k) puts you at a big disadvantage when it comes to your retirement planning efforts.

What can you do if you don't have access to a 401(k) at your job?

If you don't have access to a 401(k), you still need to make sure that you're saving for retirement, because you need retirement savings.

You can't live on Social Security alone because it doesn't replace enough benefits. You'll need other supplemental income, especially as Social Security benefits are losing ground due to inflation. The formula used to prevent that from happening undercounts the inflation seniors actually experience.

Fortunately, there are other options out there -- although the right one depends on your specific situation. If you are self-employed or run your own business, then you have more choices regarding which investment accounts to use. For example, a SEP-IRA, Solo 401(k), or Simple IRA all offer relatively high contribution limits and give you the chance to contribute to the account as an employer, employee, or both.

If you are not self-employed, you still have the option to invest in a traditional IRA or a Roth IRA to benefit from tax-advantaged retirement investing. While these accounts have lower contribution limits than 401(k) plans, traditional IRAs allow for an upfront tax deduction of contributed funds, while Roth IRAs allow you to invest with after-tax dollars but enjoy tax-free withdrawals in retirement.

If you have a qualifying high-deductible health plan, a health savings account (HSA) is another great option. You can invest with pre-tax funds, allow the money to roll over year after year, and invest it to enjoy tax-free growth. Then, after age 65, you can withdraw penalty-free, and the distributions will be taxed and treated like distributions from a traditional 401(k). Or you can withdraw tax-free to cover qualifying medical expenses.

All these accounts for the self-employed can be opened online with a variety of brokerage firms and other financial institutions. You can find one that offers low or no fees and provides you with access to a wide array of investment solutions.

Once your account is open, be sure to set up automatic contributions on your payday. This will help ensure that a contribution isn't missed, since the money will go toward your future before you get a chance to spend it.

Taking these steps can help you have the best chance at a secure retirement, even if you don't have a plan at work to help you grow the nest egg you need to support yourself in your senior years.

The Motley Fool has a disclosure policy.