How to Save for Retirement Even If Your Employer Won’t Help

One of the great perks of having a “real” job is the retirement plan.

Being able to automatically send a portion of your paycheck into an investment account can help you shore up your future. It’s even better if your employer offers a match — that’s free money in your investment account.

But what if your job doesn’t come with a retirement plan at all?

The good news is that anyone can start investing for any reason. Even better, it’s possible for you to access tax advantages when investing for retirement by opening an IRA.

Here’s what you need to know about saving for retirement on your own.

Choose your Individual Retirement Account (IRA)

Anyone with earned income is eligible to open an IRA. There are two main types of IRA to consider if you have a job, but your employer doesn’t offer a retirement plan.

Traditional IRA

A traditional IRA allows you to contribute money before you pay taxes on the income. You get a tax deduction for your contribution, reducing your taxable income and what you owe. At tax time, you will receive a statement from the broker about how much you contributed and you can claim that on your Form 1040.

However, there is a phaseout associated with your deductions if you or your spouse has a retirement plan through work. While there are no income restrictions on who can contribute to a Traditional IRA, a higher income can mean that you can’t deduct those contributions on your taxes, depending on the employer-sponsored plan situation.

Later, you must pay taxes when you withdraw money from your retirement account. Your withdrawals are taxed at your marginal tax rate.

Roth IRA

When opening a Roth IRA, you contribute after-tax money. You won’t be able to use your contributions to reduce your taxes today. However, the money grows tax-free, so you never pay taxes on your earnings.

If you think your taxes will be higher in the future, it might make sense to open a Roth IRA. You pay taxes now, and later you can save money.

There are income restrictions on contributing to a Roth IRA, though. As your income increases, you may be required to switch to Traditional IRA if you make too much.

Other options

If you own your own business, you have other options, including SEP IRA and SIMPLE IRA accounts.

If you have a side business you work on outside of your “real” job, you might be eligible for one of these accounts. They typically allow a higher yearly contribution.

How to open an IRA

Once you decide what type of IRA works best for your situation, it’s time to open your account.

There are many brokers and advisors that allow you to start investing by using an IRA. You can even open an account with many brokers with a $0 minimum balance. If you can commit at least $100 a month to investing in your future, it’s possible to get started fairly easily.

Find a broker or advisor that fits your needs. Opening an IRA account with a company like Betterment, Wealthfront, or FutureAdvisor can help you get started quickly and easily using index funds and ETFs.

Using funds is one of the best ways for beginners to start building a nest egg because it offers instant diversity and spreads out the risks involved.

Once you open your Traditional or Roth IRA, set up an automatic account transfer. This will allow you to automatically move money from your checking account to your investment account each month, without you thinking about it.

You can also ask your human resources department if it’s possible for them to contribute for you. In some cases, you can fill out a special direct deposit form that diverts a portion of your paycheck to your IRA. It’s not the same as having an employer contribution, but it can make your life easier.

Try the myRA to start

Another option you have is to open a myRA. This is a type of retirement account offered by the government. You can contribute as little as $2 per paycheck, and your money earns at the same rate as the Government Securities Fund.

You can set up your contributions from your own checking account or go through the process of having your human resources send a direct deposit from your paycheck.

With the myRA, you can only save up to $15,000 before you are required to roll the money into a private IRA account.

Your potential earnings are lower with a myRA than with a private sector IRA. When you open an IRA on your own, you can choose your investments and grow your wealth using stocks. With the myRA, your options are more limited. However, there is a low barrier to entry and it can be a good start before you move on to other accounts.

Health Savings Account (HSA)

Finally, if you want more tax-deductible savings and your employer doesn’t offer a retirement plan, you can use the Health Savings Account as part of your plan.

The HSA is a savings account that allows you to set aside money for healthcare costs. This includes copays, prescriptions, and other out-of-pocket expenses.

There are eligibility requirements that include the type of health insurance plan you have. However, if you qualify, you can contribute to your HSA for a tax deduction now and tax-free growth over time.

If you let the money sit, you can treat an HSA like a Traditional IRA when you reach age 59 ½. Otherwise, you need to make sure you use the money for qualified healthcare expenses.

Keep your retirement on track

Opening an IRA, myRA, or HSA can help you keep up with retirement, even if your employer isn’t helping.

You don’t want to fall behind on saving for your future. Don’t rely on your employer to provide for you. Take charge of your retirement with the help of your own tax-advantaged retirement account.

The article How to Save for Retirement Even If Your Employer Won’t Help originally appeared on

How Student Loan Refinancing Could Affect Your Mortgage Application

Though some grads put off a home purchase because of student loans, it’s certainly possible to buy a home when you have student debt.

However, you might need to approach your home purchase differently if you’re balancing student debt, too. Before you decide to apply for a mortgage, consider the impact of refinancing your student loans.

Depending on your situation, refinancing your student loans can either help or hurt your chances of getting approved for a home loan. Carefully consider your own circumstance before moving forward.

Does refinancing hurt your credit?

Because your credit is the first thing mortgage lenders look at, make sure that refinancing your student loans won’t hurt your chances.

“A refinanced student loan will appear as new debt on a credit report and could have a negative impact on the buyer’s credit score in the short-term,” said Ken Pederson of Fairway Mortgage in Lancaster, Pennsylvania. “Lower credit scores can impact interest rates on their mortgage, the cost of private mortgage insurance, and even the ability to qualify for a home mortgage.”

If you plan to buy a home in the next couple of months, “Sit tight, buy your home, and refinance after the settlement,” Pederson said.

However, that new credit probably won’t cause mortgage problems in the long run. Once you start making regular payments, the effect becomes positive.

“For homebuyers with a longer timeframe before purchasing, go ahead and make the move, assuming the refinance will lower the payment,” continued Pederson.

Student loan refinancing can help you buy a home

In some cases, planning to refinance your student loans first can improve your ability to buy a home.

Dan Green, a 14-year veteran of the mortgage business and founder of Growella, thinks homebuyers can come out ahead by refinancing student loans first.

“Refinancing student loans reduces your monthly obligations, which lowers your debt-to-income ratio,” Green said. With less of your monthly income going toward debt repayment, your numbers look better — especially in terms of the 28/36 qualifying ratio. You can present yourself in an improved light by refinancing first.

On top of that, you might increase the size of your mortgage. “The advantage of refinancing your student loans prior to making a mortgage application is that you can increase your maximum mortgage loan size,” said Green. “If that’s unimportant to you or unnecessary, the order of transactions won’t matter.”

“At today’s mortgage rates, every dollar you save on a student loan refinance raises your maximum mortgage size by $210,” he said.

Pay attention to the home loan program

Before you take the plunge, Pederson suggested discussing your options with a loan officer. Depending on the lender and the loan program, their view of student loans might be slightly different.

A conventional mortgage might have slightly different underwriting requirements related to student loans than an FHA loan, VA loan, or USDA loan. “All these programs have slightly different viewpoints on how lenders should look at student loans, especially if they are in deferment,” said Pederson.

Talking to a loan officer or mortgage broker can give you an idea of your options. Plus, a broker can help you navigate the realities of student loans, refinancing, and buying a home.

The same applies if you hope to use grants to help you with your down payment. Talk to someone knowledgeable about the options as you make your choice.

Don’t refinance your student loans while a mortgage is pending

It’s perfectly acceptable to refinance your student loans before or after closing on a home. But you should never begin the process while the mortgage is pending.

Have you already started the mortgage process? Even if you’re approved and the home is under contract, don’t refinance your student loans.

“Every lender has to check credit again, just before settlement,” said Pederson. “If we see any new inquiries or loans, this new information has to be researched and can cause the file to go back into processing and underwriting.”

Applying to refinance your student loans while your mortgage is pending could put your home purchase at risk.

A mortgage could impact your chance to refinance student loans

Depending on the situation, your mortgage could impact your ability to refinance your student loans. A high debt-to-income ratio could result in a rejected refinancing application. Your mortgage adds to your debts. If your income isn’t high enough to absorb that debt and provide a buffer, it could cause problems for your student loan refinance.

Make your mortgage payments on time and it shouldn’t hinder you from getting a student loan refinance. In fact, after a few months of on-time payments, you should see an improvement in your credit score.

Student loan refinancing and buying a home

It’s not a huge deal whether you refinance your student loans before or after you buy a home. The biggest impact comes from whether or not your debt-to-income ratio is holding you back.

In that case, refinancing can lower your monthly payments enough to allow you to qualify for your home.

The article How Student Loan Refinancing Could Affect Your Mortgage Application originally appeared on