Don't have a 401(k)? Here's other saving methods

Not everyone works for companies that offer 401(k)s, but that doesn't mean saving for retirement is impossible. There are other saving methods people should do if they don't have one or even if you do have one.

Continue Reading Below

Cathy Clauson, a senior vice president at AssetMark, told FOX Business one easy solution is an IRA.

However, there are different types of IRAs, so she explained the difference between them.

Traditional IRA

"A traditional IRA allows you to deduct your contribution and the assets grow tax-free until you withdraw them," Clauson said.

Roth IRA

"A Roth IRA allows you to make after-tax contributions, but the assets still grow tax-free," Clauson said.

What's the main difference?

"Both options are subject to qualified distribution and other rules, so you would want to talk it over with an adviser or representative at the firm where you plan to open the account," Clauson said.

What if I'm maxing out my 401(k) contributions already?

"If you are in the enviable position of maxing out your 401(k) and are still looking to sock money away for retirement, you are also eligible to open an IRA account -- most likely a Traditional IRA given the income limits -- that allows you to contribute an additional $6,000 ($7,000 if you are age 50 or older) after tax.

How does the taxation of my IRA work?

"The assets in the IRA will continue to grow tax-deferred, and gains will be taxed as ordinary income when you make a qualified distribution," Clauson said.

Clauson said the withdrawal tax treatment does lead some investors to put their extra income into a regular taxable account.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

"I prefer the bucket approach and to have all my retirement savings in a designated retirement account," Clauson said.