5 Retirement Options If You Don’t Have an Employer-Sponsored Plan

A retirement plan is often one of the major perks of working for an employer, and yet a shocking number of Americans do not have access to one through their jobs. That translates to almost half of the private sector workforce, or around 56 million workers, according to the Pew Charitable Trusts.

Find Out: I Asked ChatGPT When I Could Retire — I Couldn’t Believe the Answer

Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too

Other workers may not have them because they’re self-employed and haven’t gotten around to setting one up. However, with the Biden-era SECURE Act 2.0 tax incentives finally starting to roll out, you might want to get something going.

Lawrence “Larry” Divers, a certified retirement plan professional and executive vice president at Cannon Financial Institute, suggested some options to consider if you can’t count on an employer for a retirement plan.

Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?

Those With a Job: Open an IRA — There’s No Reason Not To

If you work for someone else but your employer doesn’t offer a plan (or even if they do), you can (and should) still open your own IRA, Divers urged.

Divers said, “there is absolutely no reason not to” open an individual retirement account (IRA), which he sees as the foundational retirement plan for those without employer plans.

To contribute to an IRA, you need earned income, such as wages, salary or freelance income. In 2026, you can contribute up to $7,000 ($8,000 if you’re 50 or older). Income limits apply to Roth IRAs, so high earners may be better off with a traditional IRA.

Additionally, Divers recommended taking the work out of it by automating small, regular contributions. Many banks and brokerages allow you to set up recurring transfers that make saving effortless.

Explore More: The Money You Need To Save Monthly To Retire Comfortably in Every State

Younger Employees May Consider the Roth IRA

Younger people or those in lower tax brackets may want to consider the Roth IRA. You contribute to these accounts with after-tax dollars, but “not only are the earnings tax-free, if [the funds] are in there for five or more years, you’re not going to get a penalty if you take it out,” he said.

That flexibility can allow a Roth IRA to act as a potential source of funds for other things, such as buying a home, as well as retirement.

Options for the Self-Employed

You don’t have to be a fancy small business or even have any employees beyond yourself to open self-employment retirement plans. Divers said that a self-employed plan “is literally taking money out of your left pocket and putting it in your right pocket and getting a tax deduction.”

Some options include:

• Solo 401(k): For self-employed individuals with no employees, these accounts allow both employee and employer contributions, meaning you get to essentially match yourself. You contribute to them with pre-tax dollars, helping to reduce your taxable income.

• SEP IRA: Simple to set up and maintain, these accounts let you contribute up to 25% of your net earnings, which is ideal for freelancers and side hustlers, also reducing taxable income.

• Simple IRA: Best for small businesses with fewer than 100 employees, these accounts allow both employer and employee contributions, with lower administration costs.

Use Secure 2.0 Tax Credits to Your Advantage

If you’re self-employed and thinking of starting a retirement plan, the Secure 2.0 Act offers a solid incentive: tax credits for up to five years. You get a $500 enrollment credit to start with. Then, it decreases gradually from 100% to 25%, which helps ease the cost of setting up a plan.

As Divers put it, “That’s five years of getting a tax credit for putting money in from one pocket into the other.”

Don’t Forget an Emergency Fund

In between figuring out retirement options, “Everyone should have an emergency fund,” Divers stressed. “You don’t know what emergency is going to happen to you.”

Saving between three- and six-months’ worth of income is essential for long-term financial stability. The closer you get to retirement, an emergency fund can even keep you from having to tap into retirement funds before you’re ready.

It’s best to keep these funds in places like a high-yield savings account or money market account, where you can earn interest that outpaces inflation.

Even if your job doesn’t offer retirement benefits, the tools are out there to prepare yourself for the future.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: 5 Retirement Options If You Don’t Have an Employer-Sponsored Plan