Self-employed retirement plans Aurora, CO. The independence of being your own boss in Aurora, CO is one of the best aspects of having a self-directed career. Even so, this independence often comes with potential drawbacks, particularly regarding planning for retirement, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to achieving a more comfortable retirement, working with a financial advisor in Aurora, CO to set up your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Aurora, CO wealth management and retirement planning firms understand the needs of small business owners better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your business and retirement aspirations extend well past basic numbers, and we strive to offer tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Aurora, CO, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Aurora, CO today.
Why Aurora, CO 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. From flexible contributions to significant tax savings, working with a financial advisor in Aurora, CO enables you to design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the option to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when income is lower, so your plan aligns with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for additional deductions as a self-employed individual. These regional incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute 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 determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives serves to reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with 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 Aurora, CO Business
Preparing for retirement enables you to plan ahead for what’s next with your Aurora, CO business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings offer the steady income you’ll need during retirement. Keep in mind that while the sale of a business usually creates 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, with catch-up contributions, depending on plan details).
- 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 nest egg ensure financial security through the transition. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Aurora, CO Now?
Time remains one of the most valuable resources in retirement planning. Getting a head start not only lets you accumulate a larger nest egg but also reduces the stress of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the savings you’ll have when you retire. The main reason is compound interest—the concept where your investments grow, and those returns, then, accumulate even more returns. The longer your money has to grow, the larger the effect of this growth.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $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, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently may result in substantial growth. Consider this example showing the effect 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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Outcomes may change depending on elements like market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Aurora, CO, it might seem easier to put more emphasis on reinvesting in your business instead of saving for retirement. That said, initiating a plan now allows you to:
- Take advantage of tax-deferred growth or tax-free withdrawals down the road.
- Take advantage of flexible contributions that change with your earnings.
- Establish a long-term safety measure that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and giving yourself the ability to turn your attention to your dreams—both for your future retirement and your Aurora, CO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Aurora, CO, each with its own benefits and trade-offs. A financial advisor is available to help you understand the pros and cons of each plan and identify the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Aurora, CO consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, 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 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 allows those who are self-employed to set aside a portion of their self-employment income. Contributions must come from 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) already contributed. 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can establish 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 allowable contribution 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 self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. These plans are similar to standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities can be balanced by more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, 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 those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a fixed, predetermined benefit to business owners 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 what they'll have in retirement. This strategy is ideal for higher-income self-employed individuals who want to save a substantial amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- 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 accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary determined by your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Aurora, CO for Your Self-Employed Retirement Plan
Partnering with an advisor in Aurora, CO specialized in self-employed retirement plans can be an essential partner for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and develop a personalized approach that matches your objectives. A financial advisor in Aurora, CO will evaluate your financial situation, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- 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
Self-employed individuals in Aurora, CO who aren’t equipped with the time or understanding to handle their retirement savings strategy themselves can become overwhelmed by their available plans. With Correct Capital, our Aurora, CO financial advisors manage the majority of your savings plan setup for you, to help make meeting your financial objectives as hassle-free 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 determine if we're suited to your needs for you and your business. This initial call lets us get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including how many employees you have (if any), your present financial standing, and your future objectives. This helps us create a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and go over your plan step by step to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can begin contributing. As time goes on, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Aurora, CO financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Aurora, CO include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Aurora, CO
Your business isn't "just a business" to you, and your Aurora, CO financial advisors must deliver more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. To every client in Aurora, CO, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
