A 401(k) plan is a solid foundation for any retirement strategy. It comes with tax advantages and employers often match funds, helping to grow your nest egg faster.
But not everyone can contribute to a 401(k): According to the latest data from the Bureau of Labor Statistics, almost a third (31%) of private-sector workers didn't have access to an employer-provided retirement plan in 2022.
Here's what you need to know if your company doesn't offer a 401(k) plan, including moves to make to build your retirement fund without one.
What we'll cover
- Chip away at high-interest debt
- Open a health savings account
- Invest in an IRA
- Open a brokerage account
- Bottom line
Chip away at high-interest debt
If you're weighed down by huge debt, it won't magically disappear when you turn 65.
"Paying off really high-interest debt can be a great way to improve your overall financial outlook," both now and in the future, says Ben Bakkum, a senior investment strategist at Betterment at Work.
Any debt with an interest rate over 8% is considered high interest, but credit card bills should be a real target: The average credit card interest rate soared from 16.27% in August 2022 to21.19% in August 2023. That's a lot of money that could be funneled toward savings.
Open a health savings account (HSA)
If you don't have access to a 401(k), Bakkum suggests maximizing other company benefits. A health savings account (HSA) lets you put pre-taxed funds aside for qualified medical expenses. About a quarter of employers that offer health insurance have HSA-eligible plans, according to the Kaiser Family Foundation, and there are HSA options on the public health insurance marketplace.
Unlike with a flexible spending account, money in an HSA rolls over from year to year and can be invested to grow tax-free over time. After you reach age 65, those funds can be withdrawn for any reason without a penalty — in essence turning your HSA into an extra retirement account.
If you want to maximize your HSA as a retirement fund, however, you'll need to avoid tapping into it for medical expenses unless absolutely necessary.
In 2024, you can contribute $4,150 annually to an individual HSA plan and $8,300 to a family plan.
Invest in an IRA
Anyone earning income can open and contribute to an individual retirement account, or IRA. A traditional IRA is taxed when you withdraw funds in retirement (defined as age 59 ½ or older), giving you more money to invest before then. Contributions to a Roth IRA, meanwhile, are made with after-tax dollars.Your money grows tax-free in the account and won't be taxed when you withdraw it.
There are limits to how much you can contribute to an IRA: In 2024, the cap is $7,000 a year, or $8,000 if you're 50 or older.
The best IRA accounts offer flexibility and low fees, including our overall favorite, Charles Schwab, which offers a variety of no-commission mutual funds and ETF trades. There is also no minimum deposit requirement for active investing.
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One®Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One®Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
None
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One®Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Terms apply.
For new investors, we recommend Fidelity Investments for its 24-hour customer service support and broad assortment of investment options, including no-transaction-fee (NTF) mutual funds.
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go®account, but minimum $10 balance according to the investment strategy chosen
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
Bonus
Find special offers here
Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Terms apply.
Once you have an IRA set up, Bakkum recommends setting up recurring deposits to avoid the temptation to spend the money before you can invest it.
"When you don't have a 401(k), you risk all that money being dumped in your checking account," he said.
Open a brokerage account
A brokerage account doesn't have the tax advantages of an IRA, but there's also no cap on how much you can invest. Plus, you can withdraw money before retirement without facing a penalty.
You can work with a brokerage house but there are also many top online brokers and trading platforms. CNBC recommends Ally Invests, which doesn't charge a commission fee for stock, ETFs or options trades and has no minimum deposit requirement for self-directed trading.
Ally provides useful calculators to help users analyze their portfolio and there are robo-advisors with four different portfolio types to choose from.
Ally Invest®
On Ally's secure site
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for Self-Directed Trading. $100 minimum for Robo Portfolios
Fees
Fees may vary depending on the investment vehicle selected. Self-Directed Trading has zero commission fees for stock, ETF, options trades; $0.50 per options contract. Robo Portfolios have zero management fees
Bonus
You may be eligible for up to $3,000 bonus cash when you open an Ally Invest Self-Directed account
Investment vehicles
Robo-advisor: Ally Invest Robo Portfolios IRA: Ally Invest Traditional, Roth and Rollover IRAs Brokerage and trading: Ally Invest Self-Directed Trading
Investment options
Stocks, bonds, ETFs, options, mutual funds, margin account and forex trading
Educational resources
Offers informational articles to help users improve their understanding of investment strategies and market trends
Terms apply.
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Bottom line
Just because your company doesn't offer a 401(k) doesn't mean you can't save for retirement. Take advantage of other workplace programs, pay off any high-interest debt and invest in an IRA or brokerage account.
Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Ben Bakkum, a senior investment strategist at Betterment at Work.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every investing review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investing products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
