Self-employed retirement plans Aurora, CO. The independence of owning your own business in Aurora, CO is one of the greatest advantages of having a self-directed career. Even so, this freedom often comes with a lack of security, especially when it comes to planning for retirement, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider looking into other possibilities. In addition to having a financially stable retirement, partnering with a financial advisor in Aurora, CO to set up your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Aurora, CO investment consulting and retirement planning firms truly grasp the challenges faced by entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your business and retirement aspirations aren’t limited to basic numbers, and we are dedicated to offer personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Aurora, CO, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Aurora, CO today.
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Why Aurora, CO 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 tangible benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Aurora, CO enables you to design your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when income is lower, ensuring your plan works with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for additional credits as a sole proprietor. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds serves to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t dipping into savings during tough times and facing tax penalties.
Plan for the Future of Your Aurora, CO Business
A thoughtful retirement strategy also helps you think through what’s next with your Aurora, CO business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans can provide the steady income you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure a stable foundation through the transition. You might want to partner with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the right retirement plan, you manage your financial future, lower your tax bill, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Aurora, CO Now?
There’s no denying that time is one of the most valuable resources for building your retirement fund. Beginning sooner rather than later not only helps you grow a larger nest egg but also lowers the pressure of catching up later in life. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a major impact on the total you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, in turn, earn even more returns. The more time your money has to grow, the more significant the benefit of this growth.
Example: Taylor and Alex are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to substantial growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: By investing $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 yields only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Aurora, CO, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. Even so, initiating a plan now allows you to:
- Take advantage of tax-deferred growth or withdrawals without taxes in the future.
- Benefit from contribution flexibility that change with your cash flow.
- Build a financial cushion that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and allowing yourself the ability to concentrate on your dreams—both for your retirement years and your Aurora, CO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Aurora, CO, each providing its own pros and cons. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Aurora, CO include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits those who are self-employed to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) have designated. If you have employees, you must 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 is a good option for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for companies that have no employees or if the only employee is your spouse. These plans operate much like traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the additional opportunities can be balanced by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which have 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: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (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 elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that delivers a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll get in retirement. This plan is ideal for higher-income professionals who are focused on saving a substantial amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals managing a one-person company or with less than five employees can open an individual defined benefit plan, but it's typically recommended for people above age 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary using your income, age, and retirement goals. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Aurora, CO for Your Self-Employed Retirement Plan
A financial advisor in Aurora, CO specialized in self-employed retirement plans serves as an invaluable resource for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and develop a personalized approach that aligns with your goals. Your advisor in Aurora, CO will assess where you stand financially, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Aurora, CO: Correct Capital's Process
Aurora, CO business owners who don’t have the time or expertise to oversee their retirement savings strategy independently often feel overwhelmed by their available plans. Through our team at Correct Capital, our Aurora, CO financial advisors manage the lion's share of your retirement strategy for you, to help make meeting your future savings targets as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're suited to your needs for you and your business. This initial call helps us understand what you're looking for with zero commitment 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 enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll schedule a meeting and review your plan step by step to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can start saving. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Aurora, CO financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Aurora, CO 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 Aurora, CO
You don't see your business as "just a business", and your Aurora, CO financial advisors should provide more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to create personalized self-employed retirement plans. All our clients in Aurora, CO benefit from our I.O.U. promise: all guidance we provide 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.
