Best Ways to Save for Retirement After You’ve Maxed Out Your Roth IRA (No 401K)

Best Ways to Save for Retirement

With so many choices, how are you saving for retirement?

About half of us here in the U.S. don’t have access to a 401K.

That’s a shame too because the 401K, with matching contribution, is one of the best ways to save for retirement.

Many people, therefore, turn to the Roth IRA to save for retirement. Good move, too! But there is a maximum limit to what you can contribute each year to a Roth IRA. In 2011 that limit is $5,000 ($6,000 for those 50 and older).

Also, there is an income limit that doesn’t allow some earners to even use a Roth IRA. If you have an adjusted gross income of $122,000 (individuals) or $179,000 (couples) then you can’t contribute to a Roth IRA.

So, now that we have that out of the way, let’s look at some best ways to save for retirement outside of the 401K and Roth IRA. These are in no particular order.

Traditional IRA

Roth and Traditional IRA contributions share the same annual limit. So, if you’ve already got $5,000 going to a Roth, then you can’t consider tax-deductible contributions to a Traditional IRA. Move along. Nothing to see here.

However, many folks come to the Traditional IRA because they made too much to contribute to the Roth. If that is you, then consider the Traditional IRA your next stop in retirement savings. Learn more about the Traditional IRA.


If you are self-employed, or if you have some side income, then you should be looking into the SEP IRA as your next logical place to save for retirement. The simplified employee pension (SEP) IRA is designed to allow small business owners and their employees to get in on the tax-deferred retirement savings game.

The SEP works like a Traditional IRA in that no tax is paid on the contributions to the account. You are only taxed on your distributions in retirement. Read more about the SEP IRA.

Health Savings Account (HSA)

A HSA is a powerful savings tool. The account is funded with pre-tax funds, and the distributions from the account aren’t taxed as long as they are used towards qualifying medical expenses. Here’s the catch, you can contribute several thousand dollars to your HSA each year, but you don’t have to use it right away.

In fact, you can save it all up and use it in retirement. This is what many people are doing with their HSAs. They’ve basically turned it into a retirement health savings account. Learn more about opening an HSA.

Taxable Brokerage Account

If you’ve maxed out your other tax-advantaged retirement options, there’s nothing wrong with turning to a traditional investing brokerage account. You can open up a brokerage account with one of the discount online brokers in as little as 5 minutes.

With these accounts you’ll be able to invest in a wide variety of asset classes and some options that you don’t have with a tax-advantaged account. Taxable accounts are also good for the investor who’s not 100% certain he/she wants to use the funds for retirement.

Regular Taxable Savings Account

I’m not sure why anyone would use this approach, other than the desire to have ultimate flexibility with their money. But you certainly can save for your retirement with a savings account or CD outside of an IRA. See the highest paying online savings accounts. Know that you can have a CD and a savings account within an IRA if you want.

Your House

Another option is to pour all your money into your home. If you have a mortgage, use your excess funds to pay it off as soon as you can. This is not the most diverse strategy, as you’re putting all your money into one, non-liquid asset.

Still, some people find it makes sense to invest in the place they call home. After all, you can’t live in a mutual fund.

A Word About Choice

The picture above says a lot about how people react to retirement investing. It’s confusing at first glance and there seems to be too many choices.

Don’t let your response be inaction. Just get started with something.

Figure out the specifics later. It’s more important to get started than to get it perfect. If a savings account is the only thing you can wrap your head around right now, then do it. Go full force into that savings account. Set up automatic contributions each month. Funnel all the extra money you can into that account.

As your knowledge matures and you get more comfortable rocking that savings routine, you can move towards different options. Now go get started!

What are some other ways to save for retirement outside of the 401K or Roth IRA?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.


    Speak Your Mind


  1. Kevin@RothIRA says

    Having several action plans in place really is the best way to retirement. A 401k alone might work, but 100% of the withdrawals will be taxable and that will cause other problems. A 401k with a Roth IRA, a house (that’s PAID for!) and some non-retirement savings will get the job done because each asset addresses a different concern.

    We probably could (and should) add some type of post-retirement career to the mix, even if its’ something completely different from what you’re doing now.

  2. Godfrey Sserwanja says

    Thank you for sharing with me about preparing for retirement. In Uganda, this topic is rarely taught in schools, neither do people regularly discuss it!
    Your tips will help me to plan well for the ten years I am left with, to retire.

  3. It’s a shame traditional IRA does not have the same cap as a 401k. Those without 401k’s are further penalized by the IRS with lower retirement effort deductions.

  4. Love this quote “Don’t let your response be inaction. Just get started with something.” I usually max out my Roth IRA right before Tax Day, this year I’m working on doing it earlier in the year so I don’t feel so rushed.

  5. Philip Taylor says

    Thanks for sharing, Jeb. I’ll admit that I don’t know much about using insurance for retirement savings. Evan has offered to write a guest post on using whole life for extra retirement savings. Maybe he’ll give us his opinion of VULs.

  6. These are all good ideas. I contribute to my 403B because a 401K is not an option. We also max out our Roth IRAs each year and have always wondered what some other options would be. I guess I had forgot that there was a income max for the IRA’s, but I’m not there yet…so no worries. My wife and I use a Variable Universal Life policy for an additional source for retirement which seems to be safe and growing steadily. I don’t know too much about the the VULs which is my fault since I’ve been in it for 10 years now. It made sense when I signed up….when you looked at the future projections.

  7. Derrik Hubbard, CFP says

    The book “Tax Free Retirement” by Patrick Kelly makes the case that in view of increasing taxes on the horizon that it makes sense to use the tax free loan withdrawal provision in retirement that certain types of permanent life insurance offer.

    In particular with Kelly he promotes fixed, indexed universal life.

    Also there are tax deferred annuities, rental real estate, real estate investment trusts, to mention a few as other alternative strategies.

    Derrik Hubbard, CFP

  8. Philip Taylor says

    @Evan – Could you do me a favor and provide a summary (4 or 5 sentences) of your Whole Life argument here in the comments? Thanks!

  9. I am a huge fan of using Whole Life as a way to save retirement in certain cases (i.e. when you are looking for additional buckets). Before you judge at least look at some numbers: