Do you ever wonder what to do if your employer doesn’t offer a retirement plan to participate in? Many people assume that it means you cannot contribute towards your retirement. This is not true, and there are many ways to contribute towards your retirement and start developing your financial plan.

Many employees work for small businesses or companies that don’t offer a 401(k), 403(b), etc. to participate in. Some people even own their own business or operate as 1099 employees and don’t have a retirement plan option. A Traditional or Roth IRA are two options for people in these categories and sometimes it makes sense to contribute to both. You should discuss your options with a financial professional to determine which one makes the most sense for your personal situation. If you are self-employed, then a SEP IRA might be the best option for you. All these options have tax benefits to either help reduce your taxable income today or grow your investments tax-free, so they’re not taxed in retirement.

Many people entering the workforce run into these dilemmas and end up not executing a retirement plan strategy. Starting to save for retirement at an early age is crucial for long-term financial success. Let’s look at an example:

Jack and Jane recently graduated from college, got married, and entered the workforce. The two of them realized that they did not have the option to participate in a retirement plan at their respective employers. They consulted with a financial advisor that developed a plan for them to start investing in an IRA. Jack and Jane are 25 years old and both make $50,000 per year. The couple decided they were going to be ambitious and invest 10% each into their IRAs on an annual basis. Let’s see what this looks like compared to if they would have waited until age 35 to start planning while assuming an annualized 7% rate of return.