ELLEVEST INSIGHTS

Updated for the 2025 tax year.

When someone mentions “saving for retirement,” a 401(k) — the most common type of plan offered by employers to employees — is the first thing that comes to mind for many of us. It’s the gold-standard benefit we’re told to strive for when we enter the workforce. But believe it or not, more than one-third of working adults don’t get a 401(k) option at their job — think: freelancers, people in part-time roles, and workers whose employers just don’t offer them.

If you’re in the latter group, your employer might offer a different kind of retirement plan, like a payroll deduction IRA or a SIMPLE IRA. But if they don’t — if your company doesn’t offer any retirement savings option whatsoever — that doesn’t mean you’re out of luck. Here are some other types of accounts you can use to build up that nest egg for Future You — beyond what your company offers (or doesn’t).

Option 1: An IRA (individual retirement account)

Unlike 401(k)s, IRAs aren’t tied to your employer — they’re yours and yours alone. Anyone with earned income can set up an IRA and start investing for retirement — which is great, because they come with some sweet tax benefits.

There are two main IRA types — traditional and Roth — and you can use either or both (although income limits apply with a Roth). With a traditional IRA, you put (sometimes) tax-deductible money in today, then pay the taxes on whatever you withdraw when you retire. With a Roth, it’s the opposite. You put money in after paying taxes today, it can grow tax-free, and then you get to withdraw it tax-free, too. (Here’s a deeper explanation of the differences between a Roth and traditional IRA.)

The most you can put into an IRA for the 2024 tax year is $7,000 (and 2025), plus an extra $1,000 if you’re 50 or older. That’s the limit across both Roth and traditional accounts.

So that’s a great place to start. Even if you’re not maxing it out just yet, you can work your way up over time. Regardless, as you get closer to the age you want to retire, even investing the max on an IRA may not be enough to fund your entire retirement. Which brings us to …

Option 2: A taxable investment account

Once you’ve contributed enough to max out your IRA (high-five!), you can keep going with a “normal” taxable investment account, sometimes called a brokerage account. These accounts don’t come with the same special tax benefits as IRAs, but that doesn’t mean you can’t use them to invest for retirement.

They also don’t have contribution limits (another high-five!). So if there are no IRS constraints, how much should you contribute to your taxable account after you’ve maxed out your IRA?

The short answer: enough to get you on track for the retirement you’re dreaming of (assuming you want to retire — or at least dramatically downshift your professional life). To figure that out, of course, first you have to do the dreaming part. What does that ideal retirement look like (traditional or not)? Whether you want to move somewhere warm or just escape the rat race of a corporate career, you’ll need to evaluate your cost of living: your annual budgets, your extra expenses, etc. If you expect to or want to keep working part-time, how much income could that add? And so on. Once you figure out how much you’ll need each year, you can then add that up to find out how much you’ll need to aim to have saved total.

More options for freelancers / entrepreneurs

But where should you invest for retirement if you’re self-employed, or if you own a business? Is it the same? Good news if you’re the boss of you: You might have a few more choices.

You might consider, for example, a SEP IRA — which is basically a regular IRA, except the employer (in this case, you) makes all the contributions. You just have to:

• be 21 years old and
• earn at least $750 a year.

(One more stipulation for those with employees, btw: Once they’ve worked for you for three of the last five years, you also have to fund their SEP IRAs at the same rate you contribute to your own.)

The best part about SEP IRAs is that they have high contribution limits — up to 25% of earnings or $69,000 for the 2024 tax year ($70,000 for 2025), whichever is lower.

There’s also a solo 401(k), or “one-participant 401(k).” (A ~single-serve 401(k)~, if you will.) With this kind of account, pretend you’ve split yourself into two “people”: the employer and the employee. The employer side of you can contribute up to 25% of your compensation from the business, while the employee side of you can contribute up to $23,000 for the 2024 tax year (up to $23,500 for 2025), plus an additional $7,500 if you’re 50 or older). The total limit is still $69,000 ($70,000 in 2024), but depending on your income, this weird split might actually let you contribute more with a solo 401(k) than a SEP IRA.

Where you invest will change over time

As you navigate the various accounts you’ll need to invest in your future, it’s good to keep in mind that your job / employer is likely to change multiple times over the course of your career. While your current employer might not offer a 401(k), your next one might; then, if you leave that job, you might roll that 401(k) into an IRA.* The important thing is that you know where your investments are and that you’re investing as consistently as you can.