I haven't contributed to my retirement accounts in years, but I have an even better plan for my future

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• When I lost my employer match, it no longer made sense to contribute to a 401(k).
• I wanted something more flexible, so I decided to contribute to a taxable brokerage account.
• My money is available to me when I need it now, and will be there for me in my later years.

Confession: I haven't really contributed to my retirement plan since 2019. Nevertheless, I completely believe in planning ahead for retirement. I've even worked to help other people understand why investing is important. So if my lack of recent retirement account contributions sounds unthinkable, I'll explain. 

I started saving for retirement in my 20s via an employer's 401(k) plan. I was working as a writer and editor, and retirement was decades away, but I knew the magic of compound interest could help set up my future.

The company I'd been working for offered matching funds with a staggered vesting schedule. Admittedly, it was not the best. But I still contributed pre-tax, not knowing if I'd ever get the full matching payout. (Spoiler: I didn't.) 

Fast forward to my next job, where I continued to contribute to a 401(k) with every paycheck. This employer had a more generous policy, with a company match of up to 5% of funds and immediate vesting. I was getting free money, y'all, and it was a great motivator. I could see my retirement accounts growing. 

I'll spare you my whole workplace journey, but I eventually ended up at an agency that matched up to 5% of my retirement contributions. There, I was vested fully after three years, and I even rolled in a previous 401(k) plan to consolidate my investments with lower fees. 

At this job, I'd regularly contribute the minimum required for matching and, at times, more than 10% of my salary. My focus was on saving money, growing my retirement account, and reducing taxable income. But when I decided to leave that staff job to find freedom and work for myself, I also left the matching funds and lost the ability to add more. So, I stopped investing in workplace retirement accounts. 

Going freelance changed my perspective on retirement planning

In this new stage, I could have started contributing to after-tax IRAs. But my perspective on retirement planning had changed.

You see, when I went freelance, I decided I needed to be more financially liquid. This would help while I ramped up my business and give me a cushion in case of emergency. Because there's no paid time off for consultants — unless you've mastered passive income, but that's another story — so it's helpful to have funds on hand. 

And while traditional retirement accounts can be helpful for long-term planning, especially when you're an employee receiving a vested company match, circumstances do change. In my case, I absolutely did not want to be faced with a penalty if I needed to withdraw funds before retirement age. (Another consideration was that while pre-tax retirement accounts can help employees reduce taxable income, business owners like me can reduce taxable income by deducting qualified business expenses.)

That said, my answer to being more liquid — and more in control of my finances — was not to funnel all money into a savings account and hope for the best. Because inflation is real. And fiat money stowed in a savings account loses value over time. 

These days, as inflation rises, I now have more funds in investments like index funds, a few stocks, and cryptocurrencies. And you know what? While my retirement accounts from previous staff jobs continue to grow at a rate that's not too shabby, my after-tax investments aren't too shabby either. And I'm thankful. Because while we continue to deal with economic uncertainty, I can move or withdraw my after-tax funds if I need to — without penalty. 

I'm happy to adjust as needed

While I appreciate the old me for investing via employer plans, now I'm in charge of my own destiny. I'm glad I control my investments in after-tax accounts rather than relying on a 401(k)'s potentially limited options.

Today, because of my investments, I no longer have to work as much as I used to. I have more time to see my family and pursue the media and speaking projects I love. And I know I've positioned myself well for my present situation and my future. 

This article was originally published in May 2022.