Left Out of a 401(k)? Build Your Own Retirement Plan

The Growing Retirement Savings Gap in the U.S.

A significant portion of American workers are struggling to save for retirement, with over 56 million individuals lacking access to employer-sponsored retirement plans. This issue is particularly pronounced among private-sector employees who miss out on automatic paycheck deductions and employer matches that make 401(k)s such effective tools for long-term savings. According to data from the Pew Charitable Trusts, this gap is most severe for those earning $37,000 or less annually, with 70% in this income bracket not having access to employer-sponsored plans.

Without these payroll deductions, many workers find themselves spending every dollar just to make ends meet, leaving little room for future financial security. Labor economist Teresa Ghilarducci has described this situation as a full-blown crisis, highlighting the urgent need for solutions to help millions who are shut out of workplace retirement plans.

The Hidden Cost of Going It Alone

Research by Pew shows that workers without employer-sponsored plans face significant challenges in saving for retirement. People are 15 times more likely to save when money is automatically deducted from their paychecks. Without this system, one-third of workers say they have nothing left by the end of the month. The long-term impact is even more alarming, with approximately 30% of Americans aged 59 and older having no retirement savings at all.

For the 40% of Social Security recipients who rely solely on those benefits, projected cuts in 2034 could create serious financial hardship. This underscores the importance of finding alternative ways to build retirement savings, especially for those without access to traditional employer plans.

Your DIY Retirement Toolkit

Even without a 401(k), there are several options available to start building retirement savings. Traditional and Roth IRAs are popular choices, offering different tax advantages. Traditional IRAs provide an upfront tax break, while Roth IRAs allow savings to grow tax-free for retirement. Many brokers offer automatic monthly transfers from checking accounts, making it easier to establish a consistent savings habit.

Freelancers and gig workers may benefit from a Solo 401(k), which allows self-employed individuals to make substantial retirement contributions. Additionally, state-sponsored retirement programs are expanding across the country. Programs like California’s CalSavers, Illinois’ Secure Choice, and OregonSaves automatically deduct a percentage from paychecks unless workers opt out, helping millions start saving who might otherwise have nothing set aside.

Making It Happen on Any Budget

Starting with what fits your situation is often the best approach. Even setting aside $25 a month can be more valuable than waiting for a better time, and contributions can always be increased later. Automating contributions can help keep savings on track, with many people scheduling a monthly transfer from checking to an IRA right after payday.

State plans often default to a 3% deduction, which can serve as a useful starting point. Financial planners frequently recommend setting aside 10% to 15% of income for retirement, but even smaller amounts can build momentum and benefit from compounding over time. For example, a 30-year-old who saves $50 each month might still accumulate meaningful assets by age 65, depending on investment returns.

Choosing Low-Cost Investments

Opting for low-cost investments can also make a difference. Target-date funds automatically adjust allocations over time and typically charge annual fees of less than 0.20%. Robo-advisors from companies like Vanguard, Schwab, or Fidelity provide professional management for smaller accounts, often with no required minimums.

Small Steps Still Build a Future

The retirement savings gap is real, but it doesn’t have to define your future. Even though millions of workers lack employer plans, there are still ways to build money over time. Often, the biggest setback isn’t choosing the wrong strategy—it’s waiting too long to start. Taking small steps now can pay off far more than holding out for the perfect plan.

A Better Way to Bank

Banking has changed, and so should your approach. If you’re banking at a traditional brick-and-mortar bank, you’re missing out on better opportunities. SoFi offers a combination checking-and-savings account, and if you set up direct deposit, you’ll currently earn a whopping 3.8% annual percentage rate—eight times the national average.

Additionally, if you direct-deposit $5,000 or more within the first 25 days, you'll get a $300 bonus. Direct-deposit $1,000 to $5,000, and you’ll get a $50 bonus. Banking has evolved, and it's time to evolve with it. Check out SoFi right now to take advantage of these opportunities.