Self-employed retirement plans Aurora, CO. The freedom of owning your own business in Aurora, CO is one of the greatest advantages of working for yourself. That said, this independence can come with potential drawbacks, 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, but many should consider understanding their retirement options. In addition to having a financially stable retirement, working with a financial advisor in Aurora, CO to establish your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few Aurora, CO 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 (learn more about our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we are dedicated to provide personalized solutions that reflect your objectives. Keep reading to learn more 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 speak with a self-employed financial advisor in Aurora, CO today.
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 deliver immediate benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Aurora, CO allows you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when your earnings dip, ensuring your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—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 valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, helping you keep more of your earnings.
- 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 tax breaks as a sole proprietor. These local incentives can 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 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives can help minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund ensures you don’t tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Aurora, CO Business
A thoughtful retirement strategy can assist you plan ahead for 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 yours and don’t transfer with the business. These plans can provide the financial stability you’ll need during retirement. Remember that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer a stable foundation as you make this shift. You might want to partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the best-fit retirement strategy, you manage your financial future, lower your tax bill, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Aurora, CO Now?
Time is one of the most valuable assets in retirement planning. Starting early not only allows you to build a bigger financial cushion but also minimizes the financial burden of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the total you’ll have when you retire. The main reason is compound interest—the powerful process where your investments grow, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the more significant the benefit of this compounding process.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in significant growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are for illustrative purposes only and are not a promise of future results. Actual results may vary depending on variables including market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
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 rather than saving for retirement. However, initiating a plan now enables you to:
- Benefit from tax-deferred growth or tax-free withdrawals down the road.
- Take advantage of contribution flexibility that adapt to your cash flow.
- Establish a financial cushion that provides security, no matter how your business changes.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the ability to turn your attention to your objectives—both for your future retirement and your Aurora, CO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for those working for themselves in Aurora, CO, each offering its own pros and cons. A financial advisor can help you understand the pros and cons of each option and choose the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Aurora, CO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are available to anyone with an earned income.
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: The Simplified Employee Pension IRA offers a way to save for retirement that permits entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA is a good option for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs function like conventional 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
For self-employed individuals, the contribution you can make 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 savings option for the self-employed meant for businesses without employees or if the only employee is your spouse. These plans operate much like standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. Using a solo 401(k), 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 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:
- Employee contributions of up to 100% of your self-employment income, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $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 represents a type of retirement plan that provides a set amount to self-employed individuals upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll receive in retirement. This option is recommended for high-earning self-employed individuals who want to save a substantial amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's generally recommended for those over 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary based on your earnings, age, and retirement objectives. 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 experienced with retirement plans for the self-employed can be an important asset for those working for themselves. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. An expert in your area will evaluate your financial situation, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Aurora, CO: Correct Capital's Process
Entrepreneurs in Aurora, CO who lack the time, interest, or knowledge to manage their retirement savings strategy themselves often feel overwhelmed when faced with their choices. With Correct Capital, our Aurora, CO financial advisors handle the majority of your retirement strategy for you, to help make meeting your financial objectives 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 will assess if we're suited to your needs for you and your business. This short conversation helps us get a sense of your goals with zero commitment 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 future objectives. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll sit down with you and review your plan step by step to make sure it's clear 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. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Aurora, CO financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Aurora, CO include:
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Aurora, CO
To you, your business is more than "just a business", and your Aurora, CO financial advisors must deliver more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to create personalized self-employed retirement plans. We offer all our Aurora, CO clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
