Self-employed retirement plans Albuquerque, NM. The flexibility of running your own company in Albuquerque, NM offers many benefits of working for yourself. Even so, this freedom often comes with potential drawbacks, especially when it comes to planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Albuquerque, NM to create your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Albuquerque, NM investment consulting and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement go far beyond basic numbers, and we are dedicated to create tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Albuquerque, NM, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Albuquerque, NM today.
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Why Albuquerque, NM Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer tangible benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Albuquerque, NM allows you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the option to adjust how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when revenues are down, ensuring your plan fits your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your income.
- 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 sole proprietor. These state-level incentives help make these plans even more advantageous.
- 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 contributed a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds can help mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t tapping into your nest egg during tough times and incurring penalties.
Plan for the Future of Your Albuquerque, NM Business
A thoughtful retirement strategy can assist you prepare for what’s next with your Albuquerque, NM business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These accounts ensure the steady income you’ll need in the future. Remember that while selling a business often leads to a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer a stable foundation as you make this shift. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Albuquerque, NM Now?
Time remains one of the most important resources in retirement planning. Starting early not only lets you accumulate a bigger financial cushion but also lowers the pressure of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the savings you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the larger the effect of this growth.
Example: Alex and Taylor are both entrepreneurs. Both of them want 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 contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time can lead to significant growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing 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.
Starting sooner, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario are estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is meant to provide general guidance and are not a promise of future results. Outcomes may change due to variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Albuquerque, NM, it might seem easier to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now gives you the chance to:
- Leverage growth that is tax-deferred or tax-free withdrawals in the future.
- Enjoy adjustable savings that align with your cash flow.
- Build a long-term safety measure that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the freedom to concentrate on your goals—both for your golden years and your Albuquerque, NM business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in Albuquerque, NM, each offering its own pros and cons. A financial advisor is available to help you evaluate the benefits and drawbacks of each option and determine the one best suited for your circumstances. Typically, your self-employed retirement plan options in Albuquerque, NM include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals 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: The Simplified Employee Pension IRA is a retirement plan that enables self-employed individuals to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. This type of plan may be ideal for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can open 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 retirement savings plan designed for businesses with no employees or where the only employee is a spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options 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: Only business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that guarantees a set amount to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but lets individuals clearly understand what they'll get in retirement. This strategy is best suited for higher-income entrepreneurs who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's typically advised for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary using your income, age, and retirement goals. Limits on contributions are updated yearly.
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 can be an important asset for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that reflects your aspirations. Your advisor in Albuquerque, NM will review your finances, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Help you choose a plan that suits your unique requirements
- Customize the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Albuquerque, NM: Correct Capital's Process
Entrepreneurs in Albuquerque, NM who lack the time, interest, or knowledge to manage their own retirement planning on their own often feel overwhelmed as they look at their options. Through our team at Correct Capital, our Albuquerque, NM financial advisors take on the lion's share of your retirement strategy for you, working to make meeting your financial objectives as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if our services align 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: If we both decide to move forward, we'll ask for information, including whether you have employees, your current financial situation, and your retirement goals. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and review your plan step by step to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. Throughout our relationship, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Albuquerque, NM financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Albuquerque, NM include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Albuquerque, NM
You don't see your business as "just a business", and your Albuquerque, NM financial advisors should provide more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to create tailored 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 begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
