Yes, You Can Still Save for Retirement Even If You Haven't Had a Traditional Career Path—Here's How

Your journey may not look like the textbook model, but you can still successfully save for the retirement of your dreams.

When you start researching retirement planning, a few trends become obvious. A lot of advice assumes that a 401(k)—and a 401(k) with some employer match, at that—is something most people saving for retirement have. Many tips rely on the tip-follower's income increasing over time, too, and an easy transition between jobs that allows for a simple 401(k) rollover. But what when you don't have all (or any) of those?

Sure, a large chunk of the U.S. population does have a 401(k) and consistent employment, so this standard advice applies—but there's also a large group of people who don't have a 401(k) or a traditional career path. (Plus, the number of people who are unemployed or who have experienced unemployment for an extended period of time is sure to be higher than ever after the pandemic.)

While every situation is different, even for those with more traditional financial situations, there are a few things anyone with a non-traditional financial situation or career path can do to build retirement savings. It's important to note, though, that no matter what your financial situation is, the earlier you start saving for retirement, the better. Even if you're only saving a tiny amount each month or year, giving yourself more years' worth of savings in the bank helps you take advantage of compound interest. (Plus, it makes the process of saving for retirement feel much less daunting.)

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If you haven't had a steady paycheck…

If your income is inconsistent from month to month or year to year, do what you can to keep your spending consistent and manageable. If you limit your spending to what you earn during a low-earning month, for example, you'll have money to spare in the months where you are particularly successful—and you can tuck that excess into your retirement fund to help make up for the months when you couldn't contribute to your accounts.

Retirement accounts with contribution limits operate on an annual basis, so as long as you make your contributions at some point throughout the year (or before Tax Day of the following year), you can stash cash away year after year.

You'll also want to do what you can to build a substantial emergency fund. If and when a no-earning month hits, those emergency savings will allow you to take care of the essentials without going into debt—or drawing on whatever retirement savings you have managed to accumulate.

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If you don't have access to a 401(k)…

Many jobs or employers don't come with a 401(k)—an employer-sponsored retirement account. If your job doesn't offer one or you're a contract- or project-based worker, you'll still want to open some sort of tax-advantaged retirement account that allows you to save for your future while enjoying some tax benefits, either now or in the future.

401(k)s and Roth 401(k)s are both employer-sponsored, so those might not be available to you. Instead, consider a traditional IRA (individual retirement account) or a Roth IRA—or both, if you're eligible. Each account has its own requirements and a total annual contribution limit, but you can open one on your own and keep it wherever you choose with no rollovers or vesting periods to deal with.

Note that the IRS limit for contributions to any type of IRA for 2022 is $6,000 total, or $7,000 if you're 50 years old or older. If you think you'll be able to contribute more than $6,000 or $7,000 per year toward your retirement, you can consider other accounts, such as a Simplified Employee Pension plan or one-participant 401(k) (also called a solo 401(k)). If you'd like to open one of those accounts, talk to an expert to figure out which is best for you.

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If your income has fluctuated—or even decreased—over the years…

Standard retirement advice, particularly in relation to strategies to save on taxes, assumes that you'll make more money later in your career than you will at the beginning. Your total income determines which retirement accounts you're eligible for, but it can also affect the best strategy for saving for retirement for you: Contributions to Roth accounts are made post-tax, so you pay taxes on the money as you earn it but withdraw it later tax-free, and as such, they're often recommended to savers who expect to be in a higher tax bracket in retirement than they are now.

Meanwhile, contributions to pre-tax accounts—a 401(k) and a traditional IRA—help lower your taxable income now, but you'll pay taxes on the money when you withdraw it in retirement. People in high income brackets now may prefer to contribute to a traditional account because they expect to be in a lower income bracket in retirement, so they'll pay less on that money in taxes when the time comes.

However your salary or income has fluctuated over the years, you'll want to adjust your strategy accordingly. If you bring in no income one year (but are still able to contribute to your retirement accounts), stash that money in a Roth account; if you have a particularly high-earning year, tuck that money into a traditional account to lower your taxable income now. Many experts recommend dividing your contributions between traditional and Roth accounts so you have some options in retirement, so plan to take advantage of the different benefits of each.

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