Can You Save Enough for Retirement Without a 401(k)? | Personal-finance

July 17, 2021

Review each of them to see which is the best fit for you before you open one.

Anyone earning income throughout the year can open and contribute to an IRA. These accounts have several advantages over 401(k)s, including a greater selection of investments. You can also choose between paying taxes now in exchange for tax-free retirement distributions (Roth IRA) or deferring taxes until retirement (traditional IRA).

The biggest drawback to IRAs is their low contribution limit. You can only contribute up to $6,000 to an IRA in 2021, or $7,000 if you're 50 or older. Those numbers are much smaller than the $19,500 limit for a 401(k), or $26,000 if you're 50 or older. Contribution limits can change periodically, but they'll always be far below what the 401(k) offers. If you plan to save more than $6,000 to $7,000 for retirement this year, you should pair an IRA with one of the other accounts listed here.