Planning for Retirement: Options for Non-Traditional Employees

Published on July 22, 2025

by Rachel Norton

Retirement planning is a crucial aspect of financial management. It involves making decisions today that will impact the quality of life in retirement years. While it is a common practice for traditional employees to have access to employer-sponsored retirement plans, such as 401(k) and pension plans, non-traditional employees often have to navigate through different options to save for their future. These employees, including freelancers, gig workers, and self-employed individuals, may face unique challenges in planning for retirement. However, with careful consideration and strategic planning, they can also achieve financial security in their golden years. In this article, we will explore some of the options available for non-traditional employees to plan for retirement and make the most out of their hard-earned money.

Solo 401(k)

The solo 401(k) is a retirement savings plan designed for self-employed individuals. It is similar to a traditional 401(k) offered by employers but allows the self-employed to make contributions both as an employee and employer. This means that they can contribute a higher amount compared to a traditional employee. The solo 401(k) allows for pretax contributions of up to $19,500 in 2020, plus an additional $6,500 in catch-up contributions for those aged 50 and above. On top of that, the employer can also contribute up to 25% of the self-employment income, with an overall contribution limit of $57,000 in 2020. This option not only allows non-traditional employees to save for retirement but also provides significant tax advantages.

Simplified Employee Pension (SEP) IRA

The Simplified Employee Pension (SEP) IRA is another retirement savings plan available for non-traditional employees, such as freelancers and small business owners. This plan allows the employer to contribute a percentage of the employee’s compensation, up to 25%, with a maximum of $57,000 in 2020. The contributions made by the employer are tax-deductible, and the earnings grow tax-deferred until retirement. One of the benefits of SEP IRAs is their simplicity and flexibility, making them attractive options for those who want to save for retirement while keeping things straightforward.

Traditional IRA and Roth IRA

Non-traditional employees who do not have access to employer-sponsored retirement plans can also save for retirement through traditional and Roth IRAs. A traditional IRA allows individuals to contribute up to $6,000 in 2020, with an additional $1,000 in catch-up contributions for those aged 50 and above. The contributions made to a traditional IRA are generally tax-deductible, and the earnings grow tax-deferred until retirement. On the other hand, a Roth IRA allows after-tax contributions, and the earnings grow tax-free. The contribution limits for Roth IRA are the same as traditional IRAs. However, there are income limits for eligibility, and contributions cannot be made once the income exceeds a certain threshold. These individual retirement accounts provide flexibility in investment options and allow non-traditional employees to contribute to their retirement savings.

Simplicity IRA

The Savings Incentive Match Plan for Employees (Simplicity) IRA is an easy-to-administer retirement plan suitable for small businesses with up to 100 employees. Non-traditional employees who work for companies that offer Simplicity IRA plans can participate and contribute up to $13,500 in 2020, with an additional $3,000 in catch-up contributions for those aged 50 and above. Unlike 401(k) plans, the administrative and compliance costs for Simplicity IRAs are relatively low, making it an affordable option for employers. The contributions made by employees are pretax, and the earnings grow tax-deferred.

Health Savings Account (HSA)

Although not specifically designed for retirement savings, a Health Savings Account (HSA) can also be a viable option for non-traditional employees to save for the future. HSAs are tax-advantaged savings accounts available to those enrolled in high-deductible health plans. The contributions made to an HSA are tax-deductible, and the earnings grow tax-free. After the age of 65, the funds in the HSA can be used for any purpose without penalty, making it a flexible option for retirement savings. Moreover, HSAs offer a triple tax advantage, which means that contributions, earnings, and withdrawals for eligible medical expenses are tax-free.

In Conclusion

Planning for retirement is essential for everyone, including non-traditional employees. While they may not have access to the same retirement plans as traditional employees, they still have options available to save for their future. Whether it is through solo 401(k), SEP IRA, traditional and Roth IRAs, Simplicity IRA, or HSAs, non-traditional employees can choose the option that best suits their financial goals and needs. The key is to start early, contribute regularly, and keep a close eye on the investments to make the most out of their retirement savings.