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Best Retirement Plans for Self-Employed Individuals

March 27, 2024 By Charles Moore
Are you a self-employed rockstar dreaming of relaxing beach days in retirement? It’s time to get serious about your golden years. Let’s explore the best retirement plans tailor-made for self-starters like you.

The Best Self-Employed Retirement Plans of 2024

As a self-employed champ, you’ve got options aplenty when it comes to retirement savings. These retirement plans are the cream of the crop for freelancers and entrepreneurs alike. Let’s break down the top picks for 2024.

Individual Retirement Accounts (IRAs)

Are you considering an IRA? It’s a fantastic option for individuals flying solo who want to grow their savings. Let’s dive into the advantages and disadvantages to see if it’s right for you.

IRA Contribution Limits

Before you jump into opening an IRA, it’s important to grasp the contribution limits established by the IRS. These limits determine the highest amount you can contribute each year, influencing how you plan your retirement savings.

IRA Pros

Unlock the potential of an IRA with its enticing perk of tax-deferred or tax-free growth for your investments. Here’s why it’s a game-changer:
  • Enjoy the freedom of watching your money grow without worrying about immediate tax implications.
  • Benefit from compounding interest, allowing your investments to snowball over time.
  • Take advantage of various investment options, including stocks, bonds, and mutual funds, to tailor your portfolio to your preferences and goals.

IRA Cons

While IRAs offer tax advantages, they’re not without their downsides. Contribution limits can restrict your ability to save aggressively. Additionally, early withdrawal penalties may deter you from accessing funds before retirement. Consider these factors carefully before committing to an IRA:
  • Contribution limitations
  • Early withdrawal penalties
  • Make sure to weigh the pros and cons to determine if an IRA aligns with your retirement goals.

Simplified Employee Pension IRA (SEP IRA)

Are you looking to boost your retirement savings as a self-employed dynamo? Dive into the world of Simplified Employee Pension IRAs (SEP IRAs) and discover why they might be the perfect fit for your financial future.

SEP IRA Contribution Limits

Ready to dive into the world of SEP IRA contribution limits? Let’s get started. As a self-employed champ, you’ll be thrilled to learn that SEP IRAs offer generous contribution limits. You can stash away up to 25% of your net earnings, with a maximum annual contribution cap of $58,000 (as of 2022). That means more money in your retirement kitty to enjoy your golden years to the fullest.


SEP IRAs are a goldmine for self-starters. You’ll relish the tax advantages, allowing you to keep more of your hard-earned cash. Plus, their flexibility lets you adapt contributions to your financial situation. With SEP IRAs, you can enjoy:
  • Tax-deferred growth potential.
  • Higher contribution limits than traditional IRAs.
  • Easy setup and administration, perfect for busy entrepreneurs.


Before diving headfirst into a SEP IRA, take a moment to consider the potential drawbacks:
  • High contribution limits may be a double-edged sword, requiring substantial financial commitment.
  • Contributions are solely made by the employer, limiting flexibility for employees.
  • Early withdrawals before age 59 ½ may incur a 10% penalty, plus taxes.
  • As your business grows, so do your SEP IRA obligations, potentially impacting cash flow.

Savings Incentive Match Plan for Employees (SIMPLE IRA)

Considering a SIMPLE IRA for your solo hustle? Let’s dive in. Here’s everything you should know before making the leap into retirement savings with this plan.

SIMPLE IRA Contribution Limits

How much can you squirrel away in your SIMPLE IRA? Let’s unravel the contribution limits. This retirement plan allows you to save up to $14,000 annually, with an additional catch-up contribution of $3,000 if you’re 50 or older. These limits ensure you can build a comfortable nest egg while enjoying tax benefits along the way. So, start saving away those funds and watch your retirement savings grow.


Are you thinking about diving into a SIMPLE IRA? You’re in for a treat. This retirement plan packs a punch with a slew of benefits tailored just for self-employed folks like you. Check it out:
  • Tax Advantages: Enjoy tax-deferred growth on your investments, giving your money more room to grow over time.
  • Employee Perks: If you have employees, a SIMPLE IRA lets you offer them retirement benefits, boosting morale and loyalty.
  • Easy Setup: Setting up a SIMPLE IRA is a breeze, with minimal paperwork and administrative hassle.


But before you jump in, let’s address some potential drawbacks of a SIMPLE IRA:
  • Limited contribution limits may hinder aggressive savers.
  • Mandatory employer contributions could strain cash flow for small businesses.
  • Withdrawal restrictions may limit access to funds in times of need.
  • Eligibility requirements might exclude certain types of self-employed individuals.
  • Administrative burdens could eat into your valuable time and resources.

Solo 401(k)

Have you heard about Solo 401(k) retirement plans? Let’s unpack this option for self-employed folks, exploring what sets it apart in the retirement savings game.

Solo 401(k) Contribution Limits

Ready to turbocharge your retirement savings? Prepare to be impressed by the Solo 401(k) contribution limits. Unlike traditional retirement plans, Solo 401(k)s allow you to sock away substantial sums of money each year. With both employee and employer contributions at your disposal, you can maximize your retirement fund like a boss. But remember, these limits can fluctuate, so stay informed to make the most of your savings potential.

Solo 401(k) Pros

Ready to retire in style? Dive into the perks of Solo 401(k) plans, crafted to turbocharge your savings journey:
  • Enjoy higher contribution limits compared to traditional IRAs.
  • Benefit from the potential for tax-deferred growth on your investments.
  • Take advantage of the flexibility to borrow from your Solo 401(k) if needed.
  • Embrace the opportunity for both employer and employee contributions, maximizing your retirement funds.

Solo 401(k) Cons

But hold on, there’s more to consider. While Solo 401(k) plans offer enticing benefits, they’re not without their drawbacks. Here’s what to keep in mind:
  • Limited investment options: Unlike traditional 401(k)s, Solo 401(k)s may offer fewer investment choices, limiting your diversification.
  • Administrative responsibilities: As the plan trustee, you’ll bear the burden of administrative tasks, from record-keeping to compliance.

Health Savings Account (HSA)

Curious about HSAs? Let’s delve into their contribution limits, perks, and drawbacks to see if they’re right for you.

HSA Contribution Limits

Let’s kick off by discussing HSA contribution limits. Knowing these limits helps you make informed choices about your healthcare expenses, ensuring you maximize your savings for medical needs. Stay aware of these numbers to make the most of your HSA contributions each year. By understanding the contribution caps, you can effectively plan your finances and make the most out of your HSA benefits.

HSA Pros

Why do people love HSAs? Well, for starters, they offer fantastic tax savings, allowing you to keep more of your hard-earned cash. Plus:
  • HSAs provide an excellent opportunity to invest your funds for potential growth.
  • With flexible spending options, you have control over how you use your healthcare dollars.
  • The ability to roll over funds year after year means you will keep your savings.
  • Employer contributions sweeten the deal, making HSAs even more appealing.

HSA Cons

But hold on a moment because there are some downsides to consider with HSAs as well. Before you jump in feet first, it’s crucial to weigh these drawbacks:
  • The high deductible requirement can be daunting for some.
  • You can only use HSA funds for some medical expenses.
  • Fewer investment options compared to other retirement accounts.

Other Retirement Plans

If our top picks aren’t resonating with you, fear not. There’s a plethora of alternative retirement plans waiting to be explored, perfectly suited to your unique self-employed lifestyle. Let’s dive in.

Keogh plan

The Keogh Plan, tailor-made for self-employed individuals and small businesses, provides an avenue for tax-deferred retirement savings. You can save a portion of your income for retirement and enjoy potential tax benefits along the way. With flexibility in contribution amounts and investment options, the Keogh Plan empowers you to build a secure financial future on your terms.

Defined-benefit plan

The defined-benefit plan is a rock-solid choice for those seeking financial peace of mind in retirement. It ensures a specific retirement benefit, offering a clear roadmap to your future financial security. With this plan, you can relax, knowing exactly what lies ahead when you retire and embark on your golden years. It’s like having a financial safety net to catch you when you’re ready to kick back and relax.

Profit-sharing plan

With a profit-sharing plan, you can spread the wealth among your employees while simultaneously saving for retirement. It’s a win-win situation, allowing both you and your employees to reap the rewards of your hard work. Plus, it fosters a sense of teamwork and loyalty within your business, creating a positive work environment where everyone shares in the company’s success while securing their financial futures.

What Are Self-Employed Retirement Plans?

Are you a self-employed go-getter wondering about retirement plans? It’s time to demystify the world of self-employed retirement options. In this crash course, we’ll explore the ins and outs of retirement planning tailored specifically for individuals like you. Let’s embark on this journey to secure your financial future.

Things to Consider When Choosing the Best Self-Employed Retirement Plan for You

Ready to choose the ideal retirement plan for your self-employed journey? Let’s put on our thinking caps and delve into the essential factors to tailor the perfect plan for your unique needs.

How much do you want to save for retirement each year?

How ambitious are your retirement savings goals? Dream big and envision the lifestyle you desire in your golden years. By setting clear targets for your annual retirement contributions, you’ll pave the way for financial security and watch your wealth steadily grow over time. So, go ahead, dream big, and let your aspirations guide your savings journey towards a brighter tomorrow.

How much can you afford to save each year?

When it comes to retirement savings, your budget speaks volumes. Pause and calculate how much you can comfortably save each year. By aligning your savings goals with your financial reality, you’ll discover a retirement plan that fits snugly into your budget and sets you up for success in the long run.

Do you plan on having employees in your business other than your spouse? If so, how many?

Are you considering expanding your business beyond just you and your spouse? It’s a big step. Make sure to factor in your retirement plan’s compatibility with potential future employees. Planning ensures smooth sailing as your empire grows.

How much time and money do you want to invest in administering your retirement plan?

Who’s got time for complex paperwork? Not you. Opt for a retirement plan that’s a breeze to manage, allowing you to focus on your strengths and passions without getting bogged down in administrative tasks and headaches.


Curious about self-employed retirement plans? Don’t fret. We’re here to extinguish those burning questions with comprehensive answers to help you navigate the maze of retirement planning as a solo entrepreneur.

What is the best retirement plan for a self-employed person?

Choosing the best retirement plan for a self-employed individual relies on factors such as income, age, and retirement aspirations. Generally, Solo 401(k)s, SEP IRAs, and SIMPLE IRAs are popular choices due to their tax benefits and flexibility.

Can you have a 401(k) if you are self-employed?

Yes, self-employed individuals can have a 401(k) through a Solo 401(k) plan. You can contribute as both an employer and an employee, potentially maximizing your retirement savings and enjoying tax advantages.

What is the difference between a SEP and a SIMPLE retirement plan?

SEP and SIMPLE retirement plans differ primarily in eligibility, contribution limits, and administrative requirements. Typically, self-employed individuals without employees favor SEP IRAs, while businesses with fewer than 100 employees opt for SIMPLE IRAs for their straightforward administration.

Final Thoughts

Self-employed folks can choose from a range of retirement plans, each with its perks and factors to weigh. Whether you go for an IRA, 401(k), or another option, the crucial step is to begin saving early and regularly. By picking the plan that matches your financial objectives and business requirements, you set yourself on the path toward a stable and fulfilling retirement journey.