If you don’t have a 401(k), look to an IRA

Question: I don’t have a retirement plan through an employer. What’s the best way I can save money and lower my taxes?

Answer: If you aren’t eligible to participate in an employer’s retirement plan, you are eligible for the maximum traditional IRA deduction, regardless of your income. For 2018, you can set aside and deduct up to $5,500, with an additional $1,000 contribution allowed if you’re over 50. On the other hand, the Roth IRA income limits apply to all taxpayers and can be a great way to lower your taxes after you retire if you qualify.

If any or all of your income comes from self-employment, you have additional options that allow for much higher contributions. A SEP-IRA — or Simplified Employee Pension — allows for contributions of as much as 25% of your net self-employment income, up to a maximum of $55,000. Other options available to self-employed individuals include SIMPLE IRA and a solo 401(k).

Finally, a health savings account (HSA) is perhaps the best tax break available for investing. If you participate in a high-deductible health plan, you can set aside as much as $3,450 (single coverage) or $6,900 (family coverage) in a tax-deferred account that can be invested in a selection of funds, similar to a 401(k).

If you use the money in your HSA for health care expenses, your withdrawals are tax-free as well. After you turn 65, you can withdraw the money penaltyfree for any reason, making the HSA an excellent retirement savings tool.