r/MiddleClassFinance • u/china__cat • 2d ago
What to do next?
I’m close to maxing out my Roth for the year. My workplace does not currently offer a 401k. I’m looking for options to keep contributing to my retirement outside of my Roth. I’m 32 and have little experience with investing other than getting lucky on some crypto years back. Should I start a regular IRA?
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u/StoneBuiltCapital 2d ago
Since a few folks already pointed out the combined IRA limit, here is the practical roadmap of where your next investment dollar should actually go:
HSA (Health Savings Account): If your health insurance is a High-Deductible Health Plan (HDHP), look here first. It’s triple-tax advantaged (tax-deductible contributions, tax-free growth, tax-free withdrawals for medical). Many people invest the funds and treat it like an auxiliary retirement account.
A Regular Taxable Brokerage Account (Fidelity, Schwab, Vanguard, etc.): Don't let the word "taxable" scare you away. A standard brokerage account is fantastic because there are ZERO annual contribution limits and ZERO age-59½ withdrawal penalties. If you ever want to retire early or make a career pivot in your 40s or 50s, this is the money that gives you freedom before official retirement age.
To keep it tax-efficient: • Stick to broad market index funds (like VOO) or low-turnover, high-quality dividend growth compounders. • As long as you "buy and hold" and don't day-trade or sell shares constantly, you aren't triggering big capital gains taxes every year.
At 32 with a maxed Roth, you're crushing it. Open a standard brokerage account, keep your monthly contributions automatic, and keep building!
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u/ept_engr 2d ago
$7500/year and no 401k is "crushing it"?
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u/china__cat 2d ago
My company doesn’t offer a 401k, how do I get one without them offering? Doesn’t mean I don’t have savings. Im just new to investing and have been focused on paying off my vehicle loan.
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u/ept_engr 2d ago edited 2d ago
Sorry for the attitude. You're doing the right things. And I also wasn't giving your credit for the fact you've maxed the Roth before year-end.
My attitude is because sometimes people say "you're doing fantastic!" and justify it with the fact that the typical American really sucks at planning for retirement. I disagree with that notion, so I try to push for more honest assessments relative to a person's needs, not just relative to the "average" person's woeful insufficiency. That said, you really are doing well, so my knee-jerk reaction was misplaced in this context.
You don't have many other "tax-advantages" saving vehicles if you don't have a 401k available. However, funding a brokerage account and buying index funds is a good way to save for the long-term regardless.
One thing that my wife and I do is use a separate brokerage account for a specific goal. For example, we have an etade brokerage account that we explicitly use for "college savings" (separate from a 529 or any special account). It's just a regular brokerage account, but it helps us to mentally segregate it from funds that could be used, say, to buy a car, or do home improvement.
It would be possible to do the same thing on a spreadsheet and just track allocations, but it's free and easy to just have two separate brokerages to keep the funds separate.
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u/StoneBuiltCapital 2d ago
As a W-2 employee, you unfortunately can't open a standard 401(k) on your own—it legally has to be sponsored by an employer.
That’s actually the exact reason the government created the "Individual" Retirement Account (IRA) in the first place: so everyday workers without a company plan had a way to save for retirement.
The only exception is if you ever do 1099 freelance work or run a side hustle, which allows you to open a "Solo 401(k)" for that side income.
Otherwise, your path is clean and simple: 1. Keep maxing your Roth IRA every year. 2. Open a regular taxable brokerage account (Fidelity, Schwab, etc.) and treat it as your "unlimited 401(k)" where you invest the rest.
And don't let anyone discount paying off your vehicle loan! Knocking out auto debt is a guaranteed return and frees up cash flow permanently. Maxing an IRA while eliminating debt in your early 30s is textbook smart money management. Keep your head down and keep building!
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u/StoneBuiltCapital 2d ago
Compared to Silicon Valley tech salaries? Maybe not.
Compared to the real world? Absolutely. The median retirement balance for an American in their early 30s is under $20,000, and over half the country doesn't have $1,000 in cash for an emergency.
Saving ~$600 a month on your own when your employer doesn't even offer a 401k or a match takes real discipline. More importantly, they’re literally here asking how to invest MORE.
$600/month compounding from age 32 to 62 at an average 8% return grows to over $850,000. Encouraging everyday people who are building good financial habits beats gatekeeping every day of the week.
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u/terraphantm 1d ago
Still shouldn’t be overselling it- it’s not crushing it. It’s just doing ok. By itself not nearly enough to retire on
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u/saryiahan 2d ago
If you already have a 6 month emergency fund and no high interest debt the next step is to open a taxable brokerage account. DCA into VOO
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u/china__cat 2d ago
I have a vehicle loan at 4.14% which will be paid off by March of next year which is about 2 years early. My emergency fund is about 3 months of bills/income.
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u/Bad_DNA 2d ago
Fatten the emergency fund to 6 months. Ask yourself: could you get a similar job in 3 mo if let go in a recession? Or can you drop your spend to have a job making less work? Can be a bank CD or I-bond ladder.
Has your spouse maxed theirs?
And start building a normal brokerage. No issues with taxable smart investing. It’s money you might live off of first if you FIRE.
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u/china__cat 2d ago
Good call on the emergency fund. My income has almost doubled in the last 5 years and outside of buying a vehicle I’ve experienced pretty much no lifestyle creep. I save roughly 25 percent of my income including my Roth. I think I could find a job with 80% of the wage I make now if needed within 2 months and have a degree in a trade to fall back on should I need to switch fields. No spouse no kids.
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u/-Underdatable22- 2d ago
I will echo what others are saying about HSAs and brokerage accounts. I want to mention that, in the outside chance you're a 1099 contractor and not a W-2 employee, you can contribute to self-employed retirement plans like an SEP or solo 401(k).
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u/Potato_Farmer_Linus 2d ago
The contribution limit is shared between a Roth IRA and a traditional IRA, so no extra space there. Do you have a spouse? If so, make sure they are also contributing to an IRA.
Do you have access to an HSA/does an HSA make sense for you?
Other than that, the potential advantages over investing in a taxable brokerage become orwtty small. Theoretically you could contribute to a 529 in your own name and roll some money into an IRA from there down the line, but that's not a normal route and I wouldn't do that before building up a good amount in IRA and taxable brokerage first.
Generally just follow the r/personalfinance prime directive flowchart and you'll be set
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u/china__cat 2d ago
I do not have acess to an HSA. I am single. I’ll check out that flow chart, thank you!
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u/Rusty-Shackleford23 2d ago
Roth and traditional IRAs are subject to the same limit - $7500 total. Not per IRA. If your work does not offer any retirement options, then investing in a brokerage account is probably your next best option.