Retirement Tips for the Self-Employed: What Experts Advise

Retirement Planning for the Self-Employed

Self-employment can be a powerful wealth builder, but many entrepreneurs face a retirement readiness crisis. Experts recommend choosing the right retirement account and automating contributions.

Choosing the Right Retirement Account

Patrick Shope notes that a solo 401(k) allows contributions as both employee and employer, often beating a SEP IRA. High earners should consider adding a cash balance plan for significant tax savings.

Automation and Separation

Judith Leahy advises automating retirement contributions and keeping business and personal finances separate. She also emphasizes disability and life insurance, and a succession plan.

Maximizing Tax Advantages

Lucas Belanger highlights benefits of solo 401(k) like backdoor Roth contributions and spousal employment. He stresses maintaining cash reserves and a taxable brokerage account outside the business.

Bridging Business and Personal Plans

Adrianna Adams recommends reverse-engineering the math to determine what the business needs to pay for retirement. Choosing between SEP IRA and solo 401(k) is crucial for tax-free growth.