How I'm Creating Retirement Income

Combining a taxable brokerage account with IRAs and a HSA

How I plan to spend my retirement: mmmm…carbs. Photo credit: SHVETS Production

Did you know that only 34% of Americans have access to some type of retirement plan through their employers? Another 13% have defined benefit plans, aka pensions. These have become an endangered species as 401(k)-type defined contribution plans have rapidly replaced pensions since the 401(k) option was introduced by Ted Benna in the 1980s as a way to get around IRS rules for highly compensated employees.

In a pension, employers hold responsibility for guaranteeing and managing the funds that are paid out. In a defined contribution plan that responsibility and risk is shifted to the employee. ERISA helped to put some guardrails around employer-sponsored defined contribution retirement plans to reduce risk, but in many ways employees who participate in them are on their own, even with matching employer contributions. And a new executive order on August 7th, 2025, could make it easier to employers to offer riskier types of investments¹ like crypto that were previously excluded in 401(k)s.

So what can the majority of us who don’t have workplace retirement plans do?

We can create our own and skip the layers of administrative fees.

Even if you are fortunate enough to have access to a retirement plan through your job, you might still want to listen up. You can have an employer-sponsored plan and still contribute to an IRA. At some point you will likely leave your job and have the opportunity to roll over your 401(k) or 403(b) into a self-directed traditional IRA. Plus, you might be laid off or transition to freelance work at some point.

I’ve been self-employed for most of my working lifetime. Fortunately, I started investing in a taxable brokerage account when I was in my late 40s. Do I wish I had started earlier? Absolutely yes, and if I could have I would have. But better ‘late’ than never. It’s like that saying: the best time to invest was 20 years ago, but the next best time is now.

How I created my own ‘retirement’ fund starting with a taxable brokerage account

People rarely talk about using a taxable account for retirement, but of course you can. I have found having this account to be a great asset to fall back on when financial setbacks have happened before the age of 59 and a half. It has grown as I’ve reinvested the dividends and added new money. The advantages I see are that there are no limits as to how much you can contribute, you can take money out whenever you want, and you can add new money regardless of whether or not it is earned income. Having a taxable account adds a lot of flexibility to your retirement withdrawal strategy.