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How Can I Save For Retirement If I Don’t Have A 401(k)?

How can I save for retirement if I don’t have a 401(k)?

The Treasury Secretary explains MyRA: A ‘starter’ retirement account

“I’m 28, have a good job making $60,000 to $70,000 a year. I’ve been stashing anywhere between $200 to $500 per month into my savings account. I’ve been thinking about opening up an IRA or some type of investment account to put my money into since my job doesn’t offer a 401(k) or any retirement plans, but there are so many options I don’t even know where to begin. Any advice?” –Hector Rivas, Orlando

We get it. It’s tough to put away money for long-term needs when you’re young and trying to enjoy life. But Hector is smart to be focusing on his future, especially now that he has a well-paying job.

“In finances and in life, we all have to balance living well today while planning for a more secure future,” says Patrick Amey, certified financial planner at KHC Wealth Management.

Yes, a 401(k) plan is the go-to retirement savings account for most workers. But if you’re employed at a company that doesn’t offer a 401(k) or any other retirement plan, don’t worry. There are other options.

Here’s what the experts recommend:

1. Create an emergency fund first

The first step is to create an emergency fund that will cover three to six months of expenses, even before you start saving for retirement. It’s critical to set aside money in case you lose your job, or have some other unexpected expense like a medical bill or urgent home or car repair.

“The biggest financial mistake that I see people make is that they do not have an adequate emergency fund,” says Patrick Lach, investment adviser with Lach Financial.

Hector is doing the right thing by stashing away $200 to $500 per month into a regular savings account, and he should keep doing that until he has enough to cover his expenses for several months.

One way to make it easy is to have your paycheck divided between a checking and a savings account, explains Cynthia L. Turkington, certified financial planner and owner of Fair Trust Financial. Once your money goes into your checking account, set up an automatic payment to divert a portion into a savings account, before you have a chance to spend it.

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