Today we’ll go over three other accounts that may benefit you more than a 401k!
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As many Americans get closer to retirement age, there is a growing concern about the state of their finances during their golden years. It is essential to have the right retirement account to have a comfortable retirement. While 401k has been a popular choice, several other retirement accounts can be considered better than a 401k. Here are three retirement savings options that can provide more significant benefits than a 401k.
1. Individual retirement account (IRA)
An Individual retirement account (IRA) is an investment account that allows individuals to save for retirement with tax-free growth or on a tax-deferred basis. IRAs provide several benefits; they offer more investment choices and fee flexibility than a typical 401k. Additionally, contributions to an IRA account are not limited by the amount your employer contributes to your 401k. Contributions to an IRA can range from $6,000 to $7,000 for people aged 50 or older. Moreover, unlike the 401k, the IRA is controlled by the account holder, and you can choose your account provider and investment strategy. Finally, if you have a significantly large IRA balance, you can pass it down to your heirs, helping them secure their financial future as well.
2. Health Savings Account (HSA)
A health savings account (HSA) is a type of account that allows you to save money for medical expenses on a tax-free basis. This account acts like a 401k in that you can contribute pre-tax dollars, and your money grows tax-free. What is more, unlike a typical 401k and IRA, the HSA funds can be fully withdrawn at any time for qualified medical expenses. Suppose you remain healthy and do not encounter any sudden medical expenses down the line. In that case, you can still use the funds to cover the Medicare premiums, hospital expenses, or withdrawal funds to supplement your income during retirement.
3. Roth 401k or Roth IRA
A Roth 401k or Roth IRA allows you to contribute after-tax money to your retirement account, which means that you do not receive any immediate tax benefits. Unlike the traditional 401k or IRA, money in a Roth account grows tax-free and can be withdrawn tax-free during retirement. What’s more, since you’ve already paid taxes on the money you’ve contributed, you will not have to pay any taxes in the future on the original contribution or earnings. Additionally, as there are no minimum distribution requirements for Roth accounts, your money can continue to grow tax-free in retirement, and you’ll have more control over distributions.
In conclusion, while the 401k has been a popular choice for retirement savings, these three other retirement savings options offer more benefits that can ensure a comfortable retirement. The IRA provides the flexibility and freedom to choose your account provider and investment strategy, the HSA allows you to save money specifically for medical expenses, and the Roth 401k or Roth IRA is a tax-efficient savings option, helping you secure your financial future during retirement. So, whichever choice you make, ensure that it aligns with your financial goals, and seek the advice of a professional financial advisor to ensure you make the right decision about your retirement savings.
Get good umbrella insurance if you have a taxable account because there are more lawsuit protections with the 401k.
I have an HSA account from a prior employer and now I work the the state which doesn’t offer HSA my question is should I keep the account open ? And contribute if I can thru a deduction from my paycheck ? I no longer have a high deductible insurance plan
Please help
Great video
What, in your humble opinion, is the best broker for trading options in an IrA account? More specifically covered calls…
Gggzz i never knew that about Roth and saving it for your kids college… illhave to look in to that..
Obviously, it depends…but here is my general order of accounts for someone earning the median income and below W-2 earner.
1. 401k Match
2. HSA
3. Roth IRA
4. Roth 401k
5. Traditional IRA
6. 401k
If you are in a higher tax bracket then I favor reducing taxable income more (22% +)
I am liking my fixed index annuity.. I done well with it the last 7 years, so now I have put that money into a 5 year fixed index annuity. I am sick of the yo-yo markets..
What if you're over the income limit for a ROTH IRA but your company offers a ROTH 401k? Would you add the ROTH 401k to the list in this vid?
Even if the 401K match doesn't have a match-some people are more likely to contribute to that than other accounts that might not be able to be automated or deducted directly from their pay. Once you get the money in your hands or checking account, it's a lot harder to let go of.
Good video. I've had a HSA, Roth, 403b and brokerage accounts for years and I maxed them out in that order. I do get a 4% match on the 403b, which I captured first, but then I moved on tot he Roth and HSA, and then on to the brokerage, and then finished maxing the 403b. I don't currently use my HSA at all, I save my receipts for future tax free withdrawals, but now it's just a savings vehicle which I will begin to use in retirement. I also don't expect to ever need to tap the Roth, so my plan is to leave that accnt to family.
Lucky enough to have an HSA that allows you to invest in basically anything… That can be anyone.
I opened an HSA with Fidelity and regularly put in a transfer request to move funds into it directly from the HSA account that my enployer works with as far as direct deposits (and so I get the full tax benefit on social security and FICA rather than only income tax, later when I file, that I could get back by doing my own deposits into the Fidelity account instead of using payroll). No management fee on the funds moved over to Fidelity, no minimum of $2k in cash like my "base" HSA account, and better investment options.
The best retirement account is the Roth 457, assuming it has good investments inside of it. Same limits as 401k, and never any taxes or penalties at any age for any reasons. Sadly, many of them have terrible and expensive insurance products, and of course most people don't have access to one.
How about a Roth 457b, no match, high fees VS taxable brokerage account?
Can you do a video more in depth on HSAs? How to know if you have a HDHP, etc
My HSA changed over to a new company, try to get cash out of them even with a current receipt is next to impossible. I do max out my HSA.. , my Roth is a beauty of a thing.
I agree with you. I wish I could do a do over.
Hi, Dustin. Can you cover SEP IRAs? (Not finding any fault with what you shared today)
Can you do a video comparing the legal protections of each. I’ve heard the 401k is protected from lawsuits but don’t know the details. Thanks!
Everything is getting ready to change with Digital Currency starting in 2023 and we will own nothing and like it with Democrats in control.
Hey Dustin, love your channel & all the great advice you provide! When i can, i love listening to the closing beat! Just want to say, although these are all great alternatives to a 401k, you did miss one tho. A tax advantage account with no income limit, no contribution limit, no penalties upon withdrawal! I already know you share the same stance about it as Dave Ramsey, but a deeper look into a PROPERLY structured & funded life insurance policy with high cash value would be a great tool to add to your shed. I admit not every agent knows how to structure it properly which in turn creates a terrible rep for all agents, but there are a few good ones out there still. Happy to show you what i mean if you like! Keep up the great content!
Tax deferred first, the traditional Roth 2nd and third HSA with a low cost provider.
I have used HSA's for several years. What I don't like is limited investment choices and high expenses.
Dustin, you confused me at about 2:30 time mark when you I heard that if you invest in ETF, you cant tax loss harvest. I must have misunderstood what you meant to say. A few months ago, I sold VEA and bought SCHF and harvested $101 in losses. My account does this all the time with ETF's.
Nice. Anything that you can help us with to keep the government’s hands off our retirement as much as possible is great info.
Thanks Dustin good info
More GREAT information Thank you Thank you
I have a Roth 401k with no match…with about 15yrs to retirement but don't plan on needing the money until they make me take the money……I'm a client of u guys BTW..