Self-employed retirement plans Aurora, IL. The freedom of being your own boss in Aurora, IL offers many benefits of having a self-directed career. However, this flexibility often comes with certain challenges, notably in terms of retirement savings, as you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to achieving a more secure retirement, seeking advice from a financial advisor in Aurora, IL to create your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Aurora, IL financial advisory and retirement planning firms understand the needs of self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and we take pride in helping businesses with their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to just monetary concerns, and we work tirelessly to offer personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Aurora, IL, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Aurora, IL today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
Why Aurora, IL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Aurora, IL enables you to create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when your earnings dip, so that your plan fits your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—an advantageous choice if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful 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, providing your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for additional credits as a self-employed individual. These local incentives 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, helping to lower 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: Spreading your investments across a mix of asset classes like stocks and bonds can help minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Aurora, IL Business
Preparing for retirement also helps you plan ahead for what’s next with your Aurora, IL 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 don’t transfer with the business. These plans offer the steady income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, deposits into these plans are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely minimizes 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 retirement savings provide financial security through the transition. You may also partner with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens 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 strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Aurora, IL Now?
Time remains one of the most crucial factors for building your retirement fund. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also lowers the stress of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments grow, and those returns, subsequently, earn even more returns. The longer your money has to grow, the larger the effect of this compounding process.
Example: Taylor and Alex are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in impressive growth. Here’s a simple scenario showing the impact of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate 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 gap of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Aurora, IL, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, initiating a plan now allows you to:
- Benefit from tax-deferred growth or withdrawals without taxes later on.
- Enjoy flexible contributions that align with your earnings.
- Create a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and giving yourself the ability to concentrate on your dreams—both for your golden years and your Aurora, IL business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Aurora, IL, each offering its own advantages and considerations. A financial advisor is available to help you understand the benefits and drawbacks of each plan and determine the one ideal for your needs. Generally speaking, your self-employed retirement plan options in Aurora, IL consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer key tax perks. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, 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 plans linked to your job, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that enables entrepreneurs to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) allocate. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed 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 contribution you can make 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 meant for businesses with no employees or where the only employee is a spouse. Solo 401(k)s 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 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: 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 earned income from self-employment, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, 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+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know what they'll have in retirement. This strategy is best suited for high-earning self-employed individuals who are focused on saving a substantial amount for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary determined by your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Aurora, IL for Your Self-Employed Retirement Plan
Partnering with an advisor in Aurora, IL specialized in self-employed retirement plans can be an essential partner for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that aligns with your goals. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Provide ongoing education and advice 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, IL: Correct Capital's Process
Self-employed individuals in Aurora, IL who lack the time, interest, or knowledge to handle their self-employed retirement plan independently may end up overwhelmed as they look at their available plans. At Correct Capital, our Aurora, IL financial advisors manage the majority of your retirement planning for you, to help make meeting your future savings targets as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This initial call lets us understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your present financial standing, and your long-term savings targets. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and go over your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can begin contributing. Over the course of our partnership, we'll meet with you and review your strategy to ensure it stays suited to your needs.
Our Aurora, IL financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Aurora, IL 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, IL
To you, your business is more than "just a business", and your Aurora, IL financial advisors need to offer 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. To every client in Aurora, IL, we provide 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, reach out to Correct Capital at 877-930-401k or contact us online.
