Self Employed? There are Retirement Planning Options

There are many wonderful things about being self-employed, such as the freedom to choose your own schedule and control how much you earn.   

There are, however, some downsides to self-employment as well, such as not having a built-in retirement plan for work.

The good news, though, is that you can (and should!) still prepare for retirement while being self-employed.

Below, you’ll find a few (of many) retirement plan options to consider. If you don’t find one that’s right for you, remember that you can always talk to a financial adviser about the many other choices that exist.

A Solo 401(k)

Solo 401(k) plans, also referred to as individual (k) plans, are very similar to standard 401(k) plans. However, they are simpler and are actually geared toward solo business owners with no employees.

There are contribution limits that you have to adhere to, but you can match your own contributions up to 20% since you are your own employer!

Thus, this is a great option if you want a legal and easy way to contribute lots of money to your 401(k) in a short amount of time.

Keogh Plans

True Keogh plans, which used to be very common among the self-employed, don’t really exist anymore, at least if you ask the IRS. However, you can still set up your plan in the same basic way.

You simply set these plans up similar to pensions or defined benefit plans, meaning you set an annual goal and then fund it, being sure to stay within the contribution limits. Alternatively, you could set it up like a defined contribution plan, which would make the account similar to a 401(k).

A Traditional or Roth IRA

One final option you can consider is to set up an Individual Retirement Account (IRA) or a Roth IRA.

Everyone who earns income is eligible for an IRA though Roth IRAs have some limitations.  Regardless of which one is right for you, though, these plans offer a great way to save money for retirement and even to get a few tax breaks in some cases.

As you can see, you have many options for saving forretirement while being self-employed. Whether you choose one of these options or not, be sure you do find a viable way to save for retirement.