No Retirement Savings? Here Are Three Simple Ways To Get Started

Forbes - January 7, 2021


No matter your age or stage of life, most adults have one thing in common when it comes to retirement; they feel underprepared.

Maybe you’re just starting out in your career and don’t know where to start. Or you’re one of the many in their 40s and beyond who haven’t been able to save until later in life. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2019, a quarter of non-retirees indicated that they have no retirement savings, and fewer than 40% felt that their retirement savings are on track.

Regardless of the reason or age, it’s never too late (or early) to start. Below are a few popular and easy options available to get started on saving for retirement.

401k

401ks are the most popular retirement vehicle , especially for younger groups. A 401k is an employer-sponsored retirement account that allows an employee to dedicate a percentage of their pre-tax salary to a retirement account. These funds are then invested in a range of vehicles like stocks, bonds, mutual funds, and cash. The maximum contribution for 2020 was $19,500. People over 50 can contribute a ‘catch-up’, which is an additional $6,500 a year. A major benefit to the 401k is the employer match that many companies provide. This match is usually dollar for dollar or 50 cents to the dollar, up to a set limit.

Check with your HR group at work to see if they have a 401k plan. They can get you started by helping you choose how much to contribute and where to invest it.

Traditional IRA

A traditional IRA is a type of individual retirement account in which individuals can make pre-tax contributions. The investments in the account then grow tax-deferred and the owner pays income tax on withdrawals once they reach retirement. The maximum contribution is $6,000 ($7,000 if you’re 50 or older). Almost anyone can contribute to a traditional IRA, as long as you (or your spouse) receive taxable income and you are under age 70 ½. However, your contributions are tax deductible only if you meet certain qualifications, such as:

-Existing retirement plans: If you or your spouse have no retirement plan at work, you can contribute and deduct the entire amount from your taxes. If one of you have access to a retirement plan, there are income limits.

-Income limits: Married filing jointly can receive the full deduction if they make $105K or less in 2021. If you make more than that the deduction starts to phase out. For single filers, that limit is $66k or less.

You can open an IRA at most banks, credit unions and other financial institutions. IRAs are also available through online brokers, mutual fund providers and other investment companies. Nerdwallet.com provides a good place to start with their list of the Best IRA Accounts in January 2021 .

Roth IRA

A Roth IRA is a type of individual retirement account similar to traditional IRAs, but with a few significant differences. One of the main differences is when the money is taxed. A traditional IRAs isn’t taxed when you contribute the money, but is taxed when you take it out at retirement. A Roth IRA is the opposite; you pay taxes upfront so the money you take out at retirement isn't taxed.

Roth IRA's also have no requirements on when money must be taken, so if you don’t need the money in retirement, this can be a great way to pass your wealth to your beneficiaries. How To Choose? They all have benefits, but if you have a 401k at work with a match program available to you, in most cases this is your best choice as you’re getting free money. If choosing between a traditional and Roth IRA, a Roth is better if you anticipate your income (and tax bracket) growing in the future.

By Liz Frazier, Contributor


© 2020 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.


The information in this communication or any information within the Asset Strategy Advisors, LLC domain, and or any attachments to any AdvisorStream communication is strictly confidential and intended solely for the attention and use of the named recipient(s). If you are not the intended recipient, or person responsible for delivering this e-mail to the intended recipient, please immediately notify AdvisorStream at privacyofficer@advisorstream.com and destroy all copies of this e-mail. Any distribution, use or copying of this e-mail or the information it contains by other than an intended recipient is unauthorized. This information must not be disclosed to any person without the permission of AdvisorStream LTD. Please be aware that internet communications are subject to the risk of data corruption and other transmission errors. For information of extraordinary sensitivity, we recommend that our clients use an encrypted method when they communicate with us.

  • LinkedIn Social Icon
  • Facebook Social Icon
  • Twitter Social Icon
  • YouTube Social  Icon

To view a copy of our Customer Relationship Summary (CRS), please Click Here

Advisory services offered through Asset Strategy Advisors, LLC. (ASA), Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC, Insurance offered through Asset Strategy Financial Group, Inc. (ASFG). ASFG and ASA are independent of CIS. To access Concorde’s Form Customer Relationship Summary (CRS), please click here.

Asset Strategy does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.

There is no guarantee investment plans will meet its objectives.

This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Asset Strategy at info@assetstrategy.com. 

© 2021 Asset Strategy, LLC 

 Privacy & Use Policies  |  Broker Check  | Tax & Legal Discloure