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Stop Singing the 401(k) Blues

Here's what you should do if your employer doesn't offer a retirement plan.

The following is a transcript of " Money Girl's Quick and Dirty Tips for a Richer Life," a podcast from The audio program is available via RSS feed here and at's podcast home page.

Hello and welcome to

Money Girl's Quick and Dirty Tips for a Richer Life.

Today's topic: What should you do if your employer doesn't offer a retirement plan?

A listener named Tiffany called in with this question:

Hi, Money Girl. My name is Tiffany and I'm calling with a question. My question is if you already have an IRA and your company does not offer a 401(k), what's the next best way to start saving for retirement? Thank you.

Thanks for the question, Tiffany.

An IRA Is the Place to Start

Because your employer doesn't offer a retirement plan, putting money away into an IRA is a smart thing to do, especially if you're eligible for a Roth, which is tax free, or tax-deductible contributions to a traditional IRA. It's smart to make use of these tax-advantaged ways to invest for retirement.

Now, in your case, Tiffany, it sounds like you're already contributing the maximum to an IRA, which is great. So where should you look next?

Save Outside of a Tax-Advantaged Plan

Beyond a tax-advantaged IRA, you'll want to save and invest through a regular brokerage account. While you won't get the tax advantages you get with a 401(k) or IRA, you'll have a wide range of investment choices available to you, and you can still invest in a tax-efficient way.

Before beginning to invest with a brokerage account, be sure to first put away at least three to six months' worth of living expenses in an emergency fund. Also consider your other financial goals and how your retirement plan fits into the bigger picture. You may need to balance saving for retirement with other goals such as saving for a down payment on a house.

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TheStreet Recommends

When investing, it's important to keep your eye on the prize. Saving on taxes is important, but it isn't everything. That said, one type of investment that's pretty tax-efficient is index funds.

Tax-Efficient Funds

Index funds track a particular market index, such as the

S&P 500

, which consists of the stock of 500 large companies. With an index fund, the fund manager simply buys and holds the same stocks that are in the index. The management fees are usually extremely low. And, because the manager doesn't do a lot of trading, the taxable gains distributed to shareholders are typically much smaller than what you'd experience with an actively managed fund.

You actually don't get a bad tax deal when investing outside of a tax-advantaged IRA or 401(k). In a regular brokerage account, you'll pay tax on

dividends but many stocks don't pay dividends at all. And as long as you hold a stock or mutual fund for more than a year, you'll pay capital gains tax at the relatively low rate of 15% when you sell.

Put Your Savings on Autopilot

And here's one last tip: No matter what type of account you use to save for retirement, put your contributions on autopilot. Decide how much you want to save and invest each month. A good target is 10% of what you earn. Have this amount automatically transferred into your retirement account. You can set it up so that the money is used to automatically buy shares of a particular mutual fund. You'll be surprised by how quickly those small, regular contributions can add up.

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

As always, everyone's situation is different, so be sure to consult a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.

Elizabeth Carlassare is the creator of the

Money Girl podcast. A business and technology writer, investor, and former mortgage loan officer, she has a long-standing passion for helping people make the most of their money. She is the author of the Internet business book, "Dotcom Divas," and has been interviewed on more than 60 regional and national radio programs, and featured on C-SPAN Book TV. Elizabeth holds an M.S. from the University of California, Berkeley. She has spoken internationally on the topic of women's entrepreneurship and access to capital. To request a topic or share a money tip, send an email to or call 877-6-RICHER.