Self-Employed? Here’s What You Need to Know About Saving for Retirement
🕒 3-minute read
Being your own boss has its perks—freedom, flexibility, and the chance to build something that’s truly yours. But when it comes to retirement planning, there’s no HR department to lean on. That part? Not so fun.
At Rave Financial, we’re here to make sure you’re not navigating it alone.
Where Should You Start?
Setting up a retirement plan when you’re self-employed isn’t as complicated as it might seem. In fact, your options can be just as powerful as what’s offered through an employer. One popular choice? The Solo 401(k)—a retirement plan designed for self-employed business owners with no employees.
It typically costs around $500–$750 to set up, and once your contributions reach a certain level, you’ll need to file IRS Form 5500. Contribution limits are updated each year, so be sure to check the IRS website for the latest info—or reach out to a financial expert for help navigating the details.
When’s the Right Time to Start Saving?
Everyone’s journey looks a little different. If you’re still covering startup costs or reinvesting in your business, it’s okay to hold off until you’re financially ready. But once your business is on solid ground? That’s the time to explore your options and take that next step toward a more secure future. A local financial professional who’s familiar with small business plans—like Solo 401(k)s—can help you make a smart, customized plan.
What Should You Look For in a Retirement Plan?
The right plan depends on your business structure. If it’s just you—or you and a spouse—we recommend looking into a SEP IRA or a Solo 401(k). These plans are fairly simple and don’t require much ongoing maintenance.
If you’re running a small business with a few employees (or you’re a bit closer to retirement age), a defined benefit plan may be worth exploring. These plans can allow for larger contributions and offer significant tax advantages, depending on your goals.
Is It Ever Too Late to Start?
Absolutely not. Whether you’re 28 or 58, it’s never too late to start saving for retirement. We advise starting with what you can afford—and taking advantage of tax deductions along the way. Even small contributions can make a difference over time.
The most important thing? Get started.
What If You’re Profitable and Growing?
If your business is bringing in steady income and you have between 3–50 employees, a SIMPLE IRA could be a great fit. It’s designed for small businesses and allows both you and your team to contribute.
You’ll have two options as the employer: match employee contributions up to 3% or provide a flat 2% contribution across the board. Just note—it’s a two-year commitment, and early withdrawals come with penalties. If you can, let that money grow.
Let’s Make Retirement Planning Easier—Together
At Rave Financial, we’re more than a credit union—we’re your financial partner. Whether you’re navigating your first retirement plan or expanding your business benefits, we’re here to support your goals every step of the way.
Let’s build your future—on your terms.
Retirement plans are subject to IRS rules and may change over time. Please consult your tax advisor or financial planner before making investment decisions.