The 401(k) has become synonymous with retirement savings, and for good reason. It’s one of the most widely used retirement savings vehicles, and many employers will match your contributions, which is the closest thing to free money out there.
But if you find yourself working for a company that doesn’t match your contributions, I believe there are superior strategies for reaching your retirement goals.
Roth IRA
What if I told you there’s a way to grow your investments without ever needing to pay taxes on your gains? While that sounds too good to be true, it’s perfectly real thanks to the Roth IRA.
You don’t get the upfront tax break with a Roth IRA, but you’ll avoid paying any capital gains taxes on the funds you invest, regardless of how much they grow. There are important rules to consider, such as contribution and income limits, but the potential to grow investments for decades without incurring taxation makes this one of the best retirement planning strategies.
Health Savings Account
One of the more underrated retirement vehicles is the Health Savings Account (HSA). HSAs probably don’t get as much attention as other accounts because not everyone has qualifying healthcare coverage that gives them access to HSAs, and the funds you contribute to an HSA can only be used for qualifying healthcare costs.
The beauty of an HSA is, if one’s used properly, you can avoid paying taxes altogether. Contributions are pre-tax, and as long as you use the funds for qualified spending, you’ll never pay taxes on the contributions (unlike a 401(k), where you pay taxes upon withdrawal). An HSA will also help you save adequately for rising health costs as you age into retirement.
