Self-employed retirement plans Albuquerque, NM. The freedom of being your own boss in Albuquerque, NM offers many benefits of being self-employed. However, this freedom sometimes brings with a lack of security, especially when it comes to retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Albuquerque, NM to set up your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few Albuquerque, NM wealth management and retirement planning firms understand the needs of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and we take pride in assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we work tirelessly to provide tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Albuquerque, NM, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Albuquerque, NM today.
Why Albuquerque, NM Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide real benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in Albuquerque, NM helps you customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the flexibility to tailor how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when your earnings dip, so that your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a wise move if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for additional credits as a self-employed individual. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets serves to mitigate financial risk while continuing to build your savings.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund ensures you don’t using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Albuquerque, NM Business
Preparing for retirement enables you to prepare for what’s next with your Albuquerque, NM business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These accounts offer the steady income you’ll need during retirement. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts ensure financial security through the transition. You may also work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Albuquerque, NM Now?
Time is one of the most crucial assets in retirement planning. Beginning sooner rather than later not only allows you to build a larger nest egg but also reduces the pressure of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the total you’ll have when you retire. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, in turn, generate even more returns. The longer your money has to grow, the larger the impact of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create impressive growth. Take a look at this scenario showing the effect of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the less you need to save each year to reach your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are meant to provide general guidance and are not a promise of future results. Your individual results may differ depending on elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Albuquerque, NM, it might seem easier to prioritize reinvesting in your business rather than saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that align with your cash flow.
- Create a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means gaining control over your financial future and allowing yourself the freedom to concentrate on your goals—both for your future retirement and your Albuquerque, NM business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Albuquerque, NM, each offering its own advantages and considerations. A financial advisor can help you learn about the benefits and drawbacks of each option and determine the one ideal for your unique situation. Typically, your self-employed retirement plan options in Albuquerque, NM include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide distinct tax benefits. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that permits those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) allocate. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or when the sole employee is your spouse. This type of plan operate much like standard 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential often come with more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a pre-established payout to self-employed individuals upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll receive in retirement. This strategy is best suited for higher-income entrepreneurs who want to save a substantial amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's typically suggested for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Albuquerque, NM for Your Self-Employed Retirement Plan
Partnering with an advisor in Albuquerque, NM focused on self-employed retirement strategies is an important asset for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a personalized approach that matches your objectives. Your advisor in Albuquerque, NM will evaluate your financial situation, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Offer continued financial education and guidance throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Albuquerque, NM: Correct Capital's Process
Self-employed individuals in Albuquerque, NM who aren’t equipped with the time or understanding to manage their own retirement planning independently can become overwhelmed as they look at their available plans. Through our team at Correct Capital, our Albuquerque, NM financial advisors handle the majority of your retirement strategy for you, and strive to ensure meeting your future savings targets as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This short conversation helps us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including how many employees you have (if any), your existing financial picture, and your future objectives. This allows us to put together a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and review your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can initiate your savings journey. Throughout our relationship, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Albuquerque, NM financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Albuquerque, NM include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in Albuquerque, NM
To you, your business is more than "just a business", and your Albuquerque, NM financial advisors need to offer more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Albuquerque, NM benefit from our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
