Time. Now for stretching your dollar where we give
you changeable tips to help you make the most of
your money. Most people have probably heard the phrase
, it's never too early to save for retirement.
If you have a 401k through your employer, saving
for retirement can be a relatively simple process. But
many individuals face the challenge of not having access to
an employer sponsored plan. Luckily, there are alternative
solutions available to ensure a safe retirement. So joining
me now is Pratik Patel, managing director and head
of Family Wealth Strategies at the wealth consulting firm BMO
Family Office. Thanks for joining. So let's get
started here. What are some of the top ways
that people can save for retirement if they don't have
a 401k? Yeah, absolutely. Uh You know
, the easiest solution for me would be opening an
IRA. Um There's a number of tax benefits for
doing it. It's still 100% for retirement planning.
Um If you start early, just like you mentioned
before, it can, it can really add up
. Um The contribution limits for an IRA today are
$6500. If, if you're 30 and you contribute
that 650$6500 for the next 35 years. Uh
until 65 you're gonna have over$725,000 at your disposal
in, in that Ira account. Um So other
options are H SAS. Um We're a big fan
of H SAS because not only do you get a
tax deduction on the contribution, um but that money
can grow tax free and the distributions can be tax
free if you're using them for medical expenses. So
oftentimes what clients will do is um they will pair
a high deductible medical plan with an H S A
and then they will save their medical bills. Um
If you're having a baby or pregnancy in a given
year, you can pay for that out of your
pocket, save those medical receipts and then, and
then use them 5, 10, 20 years down
the road to access that money. Um A couple
other options if you're self-employed or your set plans or
solo 401k s, um You can put money in
a brokerage account, um do automatic transfers to a
savings account. There's a number of different ways where
you can really amplify your long term savings for retirement
. Uh Even if you don't have access to a
four oh one. Ok. So let's talk about
the options for people who are self employed critique.
You went through some great options. If you work
for a company you still have access obviously to an
Ira and S A in addition to a 401k.
But what if you work for yourself? What's the
best way to navigate that? Yeah, we talked
about a moment ago. The government still does have
options for you. Um They'll let you do something
called a simplified employee pension or a set ira.
Um You can also do a solo 401k and these
eliminate a lot of the hurdles that smaller business owners
will face in terms of number of employees participation roles
, things like that. So if uh if you
do have a small business, it's really worthwhile to
talk to an investment advisor and see what your options
are. Some people have considered investing in real estate
. A lot of people think that the American dream
is owning a home critique even though it's much more
expensive these days than it was a while ago.
Do you think that's a viable option? An alternative
that is to a 41 K? Absolutely. We
have a number of clients who will invest in real
estate, especially rental properties. Um If you can
afford the down payment, then oftentimes if you can
learn the numbers correctly, not only would that property
be cash flow positive with your mortgage, but in
20 30 years, once that mortgage is paid off
, it is providing an annuity stream income for you
every single month that you could use. Not to
mention the equity that's built into the property that can
be sold to help fund your retirement. It's a
great way to diversify your retirement savings. I see
here that more states have been adopting programs for,
in an effort to improve retirement security and provide an
alternative to a 401k. What are these, some
of these state sponsored programs that you think our viewers
should look into? Yeah. Um, some of
the state sponsored programs were talking about. Um Well
, often times we we'll see clients use 5 29
plans and things like that, that can be rolled
into a Roth. Um You may not get the
federal benefits but you will get some state tax benefits
as well. So it can help amplify your savings
that way too. Any other tips for people who
are wondering, I hope I'm not falling behind when
it comes to saving for retirement, you know what
I would say is there's, it's never too early
and in no amount is too small. So if
you're able to put something away for retirement, start
with that, even if it's just a few$100
you'll be surprised how much it adds up and with
the help of a good advisor. Um that growth
over a number of years can, can really amplify
and compound. All right. Preti Patel, managing
director and Head of Family Well, strategies at BMO
Family Office, Pratique. Thank you.