Self-employed retirement plans Albuquerque, NM. The freedom of running your own company in Albuquerque, NM is one of the greatest advantages of working for yourself. Even so, this flexibility can come with certain challenges, especially in terms of retirement savings, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to enjoying a more secure retirement, seeking advice from a financial advisor in Albuquerque, NM to create your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Albuquerque, NM financial advisory and retirement planning firms understand the needs of small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and our firm have a rich history of helping businesses with their retirement planning needs. We understand that your business and retirement aspirations extend well past simple financial figures, and we strive to offer 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 talk to a entrepreneurial financial advisor in Albuquerque, NM today.
Why Albuquerque, NM Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer tangible benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Albuquerque, NM allows you to customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when income is lower, so that your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra credits as a self-employed individual. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements 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
Planning for a safe retirement isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and other assets can help mitigate financial risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Albuquerque, NM Business
Retirement planning can assist you prepare for what’s next with your Albuquerque, NM business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts ensure the reliable income you’ll need later on. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are capped at annual limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure the funds you need through the transition. You can also work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the right retirement plan, you manage your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Albuquerque, NM Now?
There’s no denying that time is one of the most valuable factors for building your retirement fund. Getting a head start not only lets you accumulate a more substantial retirement fund but also reduces the stress of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the more significant the impact of this growth.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Consider this example showing the impact of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary depending on elements like market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Albuquerque, NM, it can be tempting to prioritize reinvesting in your business rather than saving for retirement. Even so, beginning a plan now enables you to:
- Take advantage of growth that is tax-deferred or penalty-free withdrawals later on.
- Benefit from contribution flexibility that adapt to your earnings.
- Build a long-term safety measure that ensures stability, no matter how your business evolves.
The sooner you start, the less you’ll need to worry about playing catch-up later in life. Building your retirement savings today means gaining control over your financial future and giving yourself the ability to focus on your goals—both for your golden years and your Albuquerque, NM business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Albuquerque, NM, each with its own pros and cons. A financial advisor can help you understand the benefits and drawbacks of each choice and choose the one best suited for your circumstances. Generally speaking, your self-employed retirement plan options in Albuquerque, NM include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that allows those who are self-employed to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs function like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or if the only employee is your spouse. These plans are similar to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, 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 ideal for high-earning self-employed individuals who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five can open an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Albuquerque, NM for Your Self-Employed Retirement Plan
Working with a financial advisor in Albuquerque, NM specialized in self-employed retirement plans is an important asset for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a personalized approach that aligns with your goals. An expert in your area will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Maximize what you receive in retirement 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 handle their own retirement planning on their own may end up overwhelmed by their choices. With Correct Capital, our Albuquerque, NM financial advisors handle the bulk of your retirement strategy for you, to help make meeting your future savings targets as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction allows us to get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your current financial situation, and your retirement goals. This helps us create a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll sit down with you and review your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Albuquerque, NM financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Albuquerque, NM include:
- Financial Planning for Business Owners
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Albuquerque, NM
Your business isn't "just a business" to you, and your Albuquerque, NM financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. We offer all our Albuquerque, NM clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
