Get expert insights delivered straight to your inbox.

Skip to Main Content

How to Save for Retirement Without a 401(k)

If your employer doesn’t offer a 401(k) plan as part of your benefits package, you’re not alone. Nearly one-third of all workers don’t have access to an employer-sponsored retirement savings plan.1 And even though some employees have a 401(k), not all employers offer to match what their workers put into it.

But if a 401(k) isn’t an option for you, don’t panic! You still have plenty of options to help you save for retirement, even without a 401(k). With plans like Roth IRAs (our favorite), solo 401(k)s, SEP-IRAs and a few more, you can still reach your retirement goals.

Here’s how to save for retirement when you don’t have a 401(k)—starting with our favorite retirement investing tool: the Roth IRA.

Roth IRA

One of your best options for a retirement savings account when a 401(k) is off the table is a Roth IRA (Individual Retirement Account). Here’s the rundown on why we’re big fans of Roth IRAs:

What Is a Roth IRA?

The Roth IRA isn’t just an alternative to a 401(k). It’s one of the best retirement plans available!

IRA stands for individual retirement account (fitting, huh?). IRAs work like your standard workplace 401(k)—without the option of employer contributions, of course. You can contribute a set amount of your annual income to your Roth IRA. And you can even set up automatic contributions, just like with a 401(k). 

You can invest in all kinds of things through your Roth IRA, but good growth stock mutual funds are your best bet for building long-term wealth.

Why are we such big fans of Roth IRAs? The short answer is taxes. With a traditional IRA, your money grows tax-deferred, so you’ll pay taxes when you withdraw it in retirement. That’s taxes on your contributions and its growth.

In a Roth IRA, you pay taxes up front when you contribute, which means your money grows tax-free (music to our ears) and you can withdraw it tax-free in retirement (even more beautiful music!).

We consider the Roth IRA to be the rock star of retirement accounts. The plan is available to pretty much everyone (depending on your income), making it a sweet option when it comes to retirement investing plans.

Now, Roth IRAs do have a couple downsides. We already mentioned the missing employer match, but another downside is the Roth IRA has a lower contribution limit than a 401(k). In 2024, you can contribute $7,000 to a Roth IRA ($8,000 if you’re 50 or older) compared to the 401(k)’s $23,000 a year limit ($30,500 if you’re 50 or older).2

But still, the Roth IRA is your best bet if you don’t have access to a 401(k) or if your employer doesn’t offer a 401(k) match.

Before we get into how to open a Roth IRA, we need to hit the brakes and ask, Are you ready to invest for retirement?

Here’s how you know you’re ready: You’re debt-free (except for your house) and have an emergency fund of 3–6 months of expenses. That’s steps 1–3 of the 7 Baby Steps.

If that’s you, then it’s time to start investing 15% of your gross income for retirement! If you don’t have a matching 401(k) through your workplace, the Roth IRA is your next stop. And if you hit your limit before you reach your 15% goal, you have other investment options. Don’t worry—we'll go over those too!

How to Open a Roth IRA

You can open a Roth IRA through an investment company, bank or brokerage. But the best way to open an account is with an experienced investing pro who will act as a teacher and a guide. Remember, you should never invest in anything you don’t fully understand. Check out a SmartVestor Pro to find an investing expert in your area who can walk you through each step.


How much will you need for retirement? Find out with this free tool!

Once you open an account, you can choose from thousands of mutual funds, making it easy to spread out your investments evenly among the four categories we recommend: growth, growth and income, aggressive growth, and international.

Keep Boosting Your Investing Know-How

Every two weeks, the Ramsey Investing Newsletter will send you practical insights, easy-to-use resources, and the latest investing news. All explained in plain English.

By submitting this form you are agreeing to the Ramsey Solutions Terms of Use and Privacy Policy.

Why Choose Roth Over a Traditional IRA?

Like we talked about earlier, since you pay taxes on the money you put in your Roth IRA when you invest it, you’ll be able to use your savings in retirement tax-free. That means if you contribute the maximum amount each year, you could potentially have a nest egg worth almost $1.5 million after 30 years! We’ve got your attention now, right? And you won’t have to pay a penny in income taxes when you withdraw that money in retirement.

It’s also important to remember that you have no idea what tax rates will be when you reach retirement. Spoiler alert: They’re probably going up instead of down.

With a Roth IRA, you’re paying the current income taxes within your bracket as you contribute. So when you finally settle down to enjoy that nest egg, you know exactly how much money is yours versus Uncle Sam’s. (Psst . . . it’s all of it! Yep. You get to keep all your money.)

What Are the Roth IRA Requirements?

Okay, a Roth IRA sounds great, right? But what about qualifications? To be eligible to fully contribute to a Roth IRA in 2024, you must:

  • Have an earned income
  • Have a modified adjusted gross income (which is basically your total gross income minus whatever deductions you claim on your taxes) that’s less than $230,000 for married couples filing jointly or $146,000 for single people3

If you meet these qualifications, you’re eligible to contribute up to the full amount to a Roth IRA. Remember, that’s $7,000 for 2024 ($8,000 if you’re 50 or older).4

Spousal IRA

Now listen up, married people—this is important. Even if one of you doesn’t have an earned income, you can still have two Roth IRAs between both of you thanks to the spousal IRA.

For most single-income families, fully funding two Roth IRAs (which adds up to $14,000) will be enough to reach the goal of investing 15% of their income for retirement. Sweet deal!

When Should You Choose a Traditional IRA?

If your income is too high to contribute to a Roth IRA, you can go with a traditional IRA. Like with a Roth IRA, you can contribute up to $7,000 a year—$8,000 if you’re 50 or older—and you and your spouse can both have an account.5

That’s where the similarities between a traditional IRA and Roth IRA end. Unlike a Roth IRA, there are no annual income limits for a traditional. That’s the good news.

The not-so-good news is something called required minimum distributions (RMDs), which means you’re required to begin withdrawing from a traditional IRA once you turn 73 and pay taxes on it, even though contributions to a traditional IRA are tax-deductible.6

Still with us? Now, let’s look at some other options you can explore if you’re self-employed.

Saving for Retirement if You’re Self-Employed

The work-for-yourself life comes with lots of perks—but built-in retirement planning typically isn’t one of them. But that’s no excuse to avoid planning for the future. In fact, it’s more important that you start saving and growing your retirement fund as soon as possible.

Roll Over Your Old 401(k) Into an IRA

Leaving a job to start your own business or freelance work? It’s possible to take your old 401(k) with you. This is called a 401(k) rollover. You can use a direct 401(k) rollover to move a traditional 401(k) into a traditional IRA account or a Roth 401(k) into a Roth IRA account tax-free.

The good news is, a rollover doesn’t count toward your contribution limit. This lets you open an IRA, create a nice foundation, and keep on investing.

Now, you can potentially roll over your traditional 401(k) into a Roth IRA (a Roth conversion), but there are big tax implications to consider—meaning it might not be the right choice for everyone. And you should never ever withdraw the money yourself to roll over (aka an indirect rollover)—don't even touch it! That’s considered an early withdrawal and you’ll get slapped with a 10% early withdrawal penalty plus a big tax bill. No thank you!

Solo or One-Participant 401(k)

Okay, if you’re self-employed and don't have any employees, a one-participant 401(k)—also known as a solo 401(k)—may be right up your alley.

You’ve got a couple options when it comes to choosing the solo 401(k) that’s right for you.

  • Traditional 401(k): Contributions are made pretax—this reduces your taxable income for the current tax year. But you’ll have to pay taxes on any money you take out of the account in retirement.
  • Roth 401(k): Contributions are made with after-tax dollars—this doesn’t reduce your taxable income for the current tax year, but you’re able to enjoy tax-free growth and tax-free withdrawals in retirement. Now that’s a win-win! If you have a chance to go with a Roth option, take it. 

Now, with a solo 401(k), you—as the business owner—can make contributions both as an employee (up to $23,000 in 2024) and as an employer (up to 25% of your compensation). This allows you to maximize your contributions to your retirement account and also make deductions on your tax return. Just keep in mind that your total contributions to a solo 401(k) can’t exceed $69,000 for 2024.7

If you have or are planning to hire employees, you don’t qualify for a solo 401(k). But there’s an exception to the rule. A couple running a business together can both contribute to the plan. If you hire your spouse as part of your company, they can contribute up to the limit plus employer contributions, completely legit.

Setting up a solo 401(k) plan can be a bit tricky, so you should sit down with an investment pro who can walk you through the nitty-gritty steps.

What if I Run a Small Business With Employees?

If you own a small business and need retirement account options for you and your employees, look no further than a SEP-IRA or a SIMPLE IRA.

Simplified Employee Pension IRA (SEP-IRA)

SEP-IRAs are mainly used by small-business owners who want to help their employees with retirement, but freelancers and self-employed people can also use this option.

An advantage of the SEP-IRA is a much higher contribution limit than traditional and Roth IRAs, but unfortunately, there’s no Roth option. You can contribute to your own retirement this way, but again, you can’t exceed either 25% of your income or $69,000 (whichever is less).8

This is a good plan to consider if you’re thinking about hiring employees in the future as your business grows. But remember, contributions you make for yourself have to be the same percentage you make for your employees. So, if you put 15% of your salary into your account, you also have to contribute 15% of your employee’s salary into their plan.

SEP-IRAs are also typically a little easier to manage since they require less paperwork than a solo 401(k). But even if the process is simpler than a solo 401(k), don’t be careless. For your own peace of mind, you need 100% confidence in your plan, especially if you have employees. Again, this is where an investment professional can help.

Still with us? Great. Now, let’s explore another retirement option for small-business owners with employees.


Once you have employees, the rules of the road change a bit. We’ve already talked about the SEP-IRA. Another great choice is a SIMPLE IRA, which requires you to offer up to a 3% match for your employees every year—and contributions are tax-deductible. SIMPLE IRAs come with an individual contribution limit of $16,000 a year.9

Alright, folks. We’ve discussed a lot of options for retirement accounts, so let’s break it all down one more time before moving on. Here are the 2024 numbers:

Retirement Option

Employment Situation

Yearly Max Contribution (Under 50 Years Old)

Roth IRA

Any Earned Income


Traditional IRA

Any Earned Income


Solo or One-Participant 401(k)


$23,000 as employee

and up to 25% of income as employer—see section on solo 401(k)s above


Self-Employed/Small-Business Owner

25% of earned income (up to $69,000)


Small-Business Owner


What Other Options Do I Have?

Still not sure which plan is right for you? There are some other options worth looking into, especially if you work for a nonprofit organization or the federal government.

403(b) Plan

If you work for a nonprofit or other tax-exempt organization, a 403(b) plan is another great pretax investment option that works a lot like a 401(k). Organizations that offer 403(b) plans include public schools and colleges, churches, and tax-exempt charities. Some employers also offer a Roth 403(b) option.11

Thrift Savings Plan (TSP)

Federal employees can save for retirement through the Thrift Savings Plan (TSP). TSPs usually come with matching contributions and allow you to make after-tax contributions with the added plus of tax-free withdrawals when you retire. You can also choose how to split your TSP contribution among several investment options.

Taxable Investment Account

Now, if you don’t have any of the above options or if you’re able to save more once you max out your 401(k) and IRA options, contributing to a taxable investment account is a great way to hit your 15% investment goal.

Get Started Today!

Phew. That was a lot of information! Don’t know where to start? With SmartVestor—our nationwide investing network—you can find an investment pro who can help you decide which one of the investment options we just talked about is right for you. You can even set up automatic contributions to make retirement saving as convenient as a 401(k). 

Find your SmartVestor Pro today!

Make an Investment Plan With a Pro

SmartVestor shows you up to five investing professionals in your area for free. No commitments, no hidden fees.

Find Your Pros

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

Did you find this article helpful? Share it!

Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

Related Articles

how does a roth ira work

What Is a Roth IRA and How Does It Work?

One of the most popular ways to save for retirement is a Roth IRA, and for good reasons. But what is a Roth IRA, and why is it such a great option for investing? Let’s discuss it.

Ramsey Ramsey
Do you have a retirement plan?

How to Plan for Retirement

Retirement planning isn’t an “old people” thing—it’s a smart people thing! And it’s never too early to start planning for your retirement future. Here’s a step-by-step plan to get you started.

Ramsey Ramsey