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Saving for Retirement With or Without a 401(k) Plan

If your employer is small and doesn’t offer a 401(k), you should care! If your employer is large and offers a 401(k) and you are not participating, you should absolutely care! The bottom line, whether your employer has a plan in place or not, you should truly care about your retirement planning and how to fund it.

Unfortunately, the golden era of true employer pensions is no more. Gone are the days when an employee worked 30 years for one company and retired primarily on the funds of their former employer’s pension plan. The pension plans of yesteryear were mega-annuities, which now have become extinct because employers no longer see those annuity premium payments as cost-effective. That means the responsibility of retirement planning has shifted solely to the employee, which is a major problem when one-third of the working population does not have access to an employer-sponsored defined retirement plan.

Why Businesses Don't Offer Retirement Plans

There are many reasons why businesses of all sizes don’t offer retirement plans, ranging from the belief that they are too expensive to maintain, to believing they can’t afford to provide a contribution match, or to simply feeling that 401(k)s are too hard to administer. Regardless of employer size or reason, if you currently work for a business that doesn’t offer a retirement plan, there are other accounts that allow you to fund and plan your own retirement. 

This is vital—don’t allow your employer’s inability or unwillingness to provide retirement savings options keep you from planning and funding your own retirement. Eventually, we will all be too old or physically unable to work. How will you survive with no retirement savings if you are advanced in age and unable to earn a living? (For more from this author, see: Gen Xers: Are You Financially Ready for Retirement?)


For the individual looking to save towards retirement, the myRA was a good starting account, but recently has been ruled to end by the Treasury Dept and Trump administration. A traditional or Roth IRA are also great options, depending on one’s preferred tax benefits and income. 

For those like myself who are small business owners with very few or no employees, a SIMPLE or SEP IRA is a great option. All of these are individual retirement accounts that allow the owner to make contributions up to a certain amount, depending on the type of IRA in question and/or age of the individual. 

Once the contributions have been deposited, they can then be invested into entities such as mutual funds, ETFs, stocks, bonds or even real estate. The greatest benefit an IRA provides, just like a 401(k), is that the investments can grow over time without being taxed. Although there are certain risks involved when choosing to invest, today there just aren’t many other alternatives available if you have any expectation of real future growth. (For related reading, see: IRAs: Advantages, Disadvantages and Which One Is Right for You.)


Referring back to the “good ole days” of yesteryear, bank customers could deposit their hard earned money into CDs (certificates of deposit) and expect a decent return (4%-8% in some cases) and safety for their investment. However, because CDs are bank instruments with virtually no risk (FDIC-insured), and since interest rates have remained relatively non-existent for a decade now, the current return on CDs is minimal at best. This renders them virtually useless as an alternative to fund a long-term retirement plan.

401(k) plans have gained immensely in popularity over the years and many employers offer them today. If you are fortunate to work for a company that provides one, make sure you are contributing. Other than tax-deferred growth, the other awesome benefit provided, in most cases, is a company match. However, if you aren’t contributing, then the company won’t either, which basically means you are passing up free money every day!  

Another benefit of a 401(k) is the funds can be transferred or rolled over into to an IRA. So if you are considering leaving an employer, the funds you accumulated during your tenure don’t have to be held hostage in your absence. 

The responsibility of funding our retirement rests squarely on our shoulders. Regardless of whether an employer provides a defined plan or not, we need to ensure we are funding an appropriate retirement plan in some capacity. The “glory days” are gone, but obtaining a quality retirement is possible and definitely within reach. Don’t allow complacency or your employer’s inability to provide a sponsored retirement plan keep you from a quality, well-deserved retirement.

(For more from this author, see: Save More Money to Reduce Financial Stress.)