After adding up all your necessary expenses, it can be hard to find money for retirement savings. If you've recently lost your job or are struggling to find a new one, it can seem downright impossible.
Don't give up hope, though. Although there aren't exclusive retirement accounts for the unemployed, there are some savings vehicles you can still take advantage of. And with the booming gig economy, you have options to generate income to put toward your golden years. If you don't have a steady job, here are some ways you can catch up on retirement savings.
Find Temp Work or Gig Economy Jobs
The first step toward getting back on track with saving for retirement is to find one or more income streams.
"Picking up a gig is a great way to bring in some extra income and continue to save while you're seeking a long-term career opportunity," said Josh Duvall, a certified financial planner. "This includes things like driving for Uber or Lyft, bookkeeping, consulting in your former area of expertise, or even becoming a virtual assistant. If you have a vehicle, phone and an internet connection, there are a lot of easy ways to make a few extra bucks."
You might even be able to find a job with good retirement benefits, even if you only plan to stay for a short period of time.
"Many companies like Costco and Starbucks are known to have good benefits that can help keep a retirement plan on track," said Adam C. Harding, a certified financial planner located in Scottsdale, Ariz. "It's not uncommon for former white-collar, college-educated individuals to overlook certain jobs in the service or retail sectors. This is a mistake because many of them offer attractive benefits packages and upward mobility once in the firm."
Check Out Individual Retirement Plan Options
Just because you can't find a job with a generous retirement plan — or any employer-sponsored retirement plan at all — this doesn't mean you must miss out on the tax benefits of a qualified retirement plan.
"If an individual has earned income and doesn't qualify for an employer-sponsored retirement plan, he can usually open an IRA or Roth IRA and fund this account instead," said Harding.
Contributions to an IRA are limited to $5,500 if you're under 50 years old or $6,500 if you are 50 or older for 2017. Or, your contributions cannot be more than your taxable compensation for the year, if your compensation was less than $5,500 (or $6,500). So if you find a gig that pays you $1,500 and that's your only taxable compensation for the year, you can't contribute more than $1,500 to an IRA.
Still, every little bit helps when you're saving for retirement thanks to the power of compound interest.
Take Advantage of Your Spouse’s Retirement Plan
Although being married won't allow you to create a 401k plan with your spouse's employer, you can still contribute to an IRA — even if your taxable compensation is less than your spouse's. Just make sure you file a joint return.
Let's say you're not able to find a full-time job for the entire year and you have no taxable compensation. However, your spouse's taxable compensation is $50,000. Your spouse can contribute and deduct $5,500 to an IRA — and so can you, thanks to the Kay Bailey Hutchison Spousal IRA Limit.
Just remember: Both you and your spouse can make the maximum contribution to your respective IRAs as long as you file a joint tax return. If you file separate returns, however, you won't be able to contribute. More examples are included on the IRS website.
Related: 7 Ways to Profit Off Your Marriage
Create Your Own Qualified Retirement Plan
If you don't have a typical job but you're still self-employed, you can create an employer plan for yourself. For example, a Simplified Employee Pension (SEP) Individual Retirement Account might be right for you.
With a SEP-IRA, you can make contributions toward your own retirement through an IRA. For 2017, you can contribute up to the smaller of $54,000 or 20 percent of your net self-employment income.
You also have the option of creating your own 401k plan, sometimes referred to as a "solo 401k." With a solo 401k, you can defer up to $18,000 in 2017 (or $24,000 if you're 50 or older). You can also contribute up to 20 percent of net earnings from self-employment. Still, your total contributions cannot exceed $54,000 — not including catch-up contributions for those who are 50 and older.
Consider a Brokerage Account
If you're hesitant to contribute to a qualified retirement plan because you're concerned about having to take the money out soon and pay an early withdrawal penalty, consider opening a separate brokerage account.
"A retirement plan doesn't have to solely be funded with retirement accounts," said Harding. "Perhaps this period of unemployment has reinforced the need for a greater reserve of accessible after-tax funds, and in this case, a taxable brokerage account may be appropriate. Capital gains, dividends and interest will not be tax-deferred, but the balance in the account can be accessed penalty-free during a period of financial hardship or for financial objectives prior to age 59½."
Brokerage accounts should also be considered if you don't have earned income and therefore aren't eligible to contribute to an IRA.
"You don't have to invest in an IRA or retirement account," noted Scott Stratton, a CFP and president of Good Life Wealth Management, a registered investment advisor in Dallas. "In fact, if you're not working, you probably don't need a tax deduction, so funding a traditional IRA isn't really that beneficial. Instead, you could simply invest in a taxable brokerage account."
Pick Investments Carefully
How you invest your savings should depend on your time horizon for when you'll need the money. Where you hold money that you might need for next month's rent is very different from how you continue to invest funds you have earmarked for retirement decades down the road.
"We suggest that unemployed folks can invest in the stock market, provided their time horizon for needing the money is at least five years away," said Stratton. "If they might need to tap the money before five years, it doesn't belong in the market."
Regardless, don't let fear keep you out of the stock market. One of the worst mistakes you can make when trying to catch up on retirement savings is sitting on the sidelines and ignoring investment opportunities.
"If you have an emergency fund and/or cash on hand to meet your everyday living expenses, then by all means continue to invest in the market," said Duvall. "Don't let a short-term circumstance like unemployment or bad market conditions push you out of investing in stocks for the long term. Your greatest investment advantage in the stock market is time, so try your best not to take any time away from yourself by sitting on the sidelines."
Plan Ahead in Case Unemployment Strikes Again
One reason saving for retirement during unemployment is so difficult is because people often have small or non-existent emergency funds.
"Hopefully, you've put away three to six months of your monthly living expenses as an emergency fund so you can continue living life as normal, including saving for retirement, while you search for your next career move," said Duvall. "If you haven't, continuing to save for retirement while you're unemployed will be difficult."
If you typically spend $2,600 per month and contribute $400 to your retirement plan, calculate your emergency fund based on $3,000 of monthly expenses, not $2,600. Instead of a six-month amount of $15,600, you're shooting for $18,000. But if you become unemployed, you can continue to set aside $400 per month for retirement to avoid falling behind while you're searching for your next opportunity.