Beyond the 401k: Understanding IRAs for Retirement Savings

Not having a 401(k) at work can make retirement feel out of reach. Without an employer-sponsored retirement plan, it may feel harder to know how to start building long-term savings for the future.

An IRA, or Individual Retirement Account, gives you a way to save and invest for retirement on your own. These accounts can help workers build financial security even without employer-sponsored benefits.

This matters because not every worker has access to a retirement plan through their job. According to the U.S. Bureau of Labor Statistics, only 72% of workers in non-government jobs had access to employer-sponsored retirement benefits in March 2025.

In this WorkMoney guide, we’ll break down how IRAs work, the different types available, how to open one, and simple ways to start building retirement savings.

What Is an IRA?

An Individual Retirement Account (IRA) is a personal retirement savings account you can open yourself through a bank, brokerage, or investment platform. It offers tax advantages that can help your retirement savings grow over time.

Here Are the Two Main Types of IRAs

The IRS limits how much people can contribute to IRAs each year. For 2026, eligible individuals can contribute up to $7,500 annually, or up to $8,600 if they’re age 50 or older.

Here is the core difference between the two:

• Traditional IRA = possible tax break now

• Roth IRA = possible tax-free income later

Neither option is automatically better. The right fit depends on your income, tax situation, and long-term goals.

Why IRAs Matter if You Don’t Have a 401(k)

Without a workplace retirement plan, it can be easy to put retirement savings off because other financial priorities feel more urgent. In fact, a 2024 survey found that 67% of Americans felt behind on their savings goals, with many pointing to daily expenses and unexpected costs as major challenges.

But saving for retirement does not have to start with huge amounts of money.

One thing many people underestimate is how powerful consistency can be. Even smaller monthly contributions can grow substantially over time because of compound interest.

Here’s what starting now could look like over time:

Someone who starts with $100 and contributes another $100 a month could grow their savings to nearly $50,000 over 20 years with steady investment growth. That growth happens because your earnings can continue earning more over time.

It’s Not Too Late To Start Now

Even if you feel like you’re starting late, progress is still possible. Here’s a real-life example:

A 50-year-old worker earning $45,000 shared that he had no retirement savings or 401(k) match, but still decided to start contributing to a Roth IRA to begin building long-term financial security. Financial experts encouraged him to focus on consistency and long-term progress instead of feeling discouraged about starting later.

For example, if he contributed $300 a month to a Roth IRA for 15 years with steady investment growth, his savings could potentially grow to more than $90,000.

Many people also do not realize that opening an IRA is only the first step. The money inside the account typically needs to be invested instead of simply sitting in cash, so it has the opportunity to grow.

For beginners, low-cost index funds or target-date funds can be good starting points because they spread your money across many companies instead of relying on a single stock.

How to Open an IRA and Start Investing

Many workers may avoid retirement accounts because the process feels overly complicated. But in reality, opening an IRA is usually simpler than many people expect.

Here is an easy way to get started:

1. Choose a Brokerage or Investment Platform

Investment platforms are designed to help newer investors start building long-term savings with accessible investing tools and educational resources.

When comparing investment platforms, look for one with:

• Low fees

• Easy-to-use tools

• Automatic contribution options

• No large account minimums if possible

2. Decide Between Traditional or Roth

Think about whether you would rather potentially save on taxes now or potentially avoid taxes on qualified withdrawals later.

3. Set Up Automatic Contributions

Even small automatic transfers can help build consistency. According to Fidelity, automating retirement contributions is one of the easiest ways for many investors to stay on track long term.

4. Choose Investments Inside the Account

Opening the IRA is not enough. You also need to choose how the money inside the account will be invested so it has the opportunity to grow.

As a beginner, you can start with:

• Target-date funds

• S&P 500 index funds

• Total market index funds

These options can be easier for beginners because they spread your money across many different investments.

Retirement Options for Self-Employed Workers

If you’re a freelancer, gig worker, independent contractor, or small business owner, you may have additional ways to save for retirement beyond a standard IRA.

Two common options include:

Simplified Employee Pension (SEP) IRA

Simplified Employee Pension (SEP) IRAs can allow eligible self-employed workers to contribute up to 25% of their net earnings from self-employment toward retirement, which may be much higher than the limits for a regular IRA, depending on your income.

Solo 401(k)

A Solo 401(k) can also allow self-employed workers to save more for retirement if they don’t have employees other than a spouse.

These accounts can make it easier for self-employed workers to build retirement savings during years when income is higher.

Other Resources

The IRS Retirement Plans Resource Center provides retirement plan guides, contribution limits, and eligibility information for IRAs and self-employed retirement plans. Explore your options here.

Final Thoughts

Feeling behind on retirement savings is incredibly common, especially for workers without employer-sponsored benefits. But even starting small is still starting.

At WorkMoney, we believe workers deserve clear, practical financial tools that help them build stability, create more options, and feel more confident about their future.