Self-employed retirement plans Boston, MA. The independence of being your own boss in Boston, MA is one of the best aspects of working for yourself. However, this freedom can come with a lack of security, notably regarding building your retirement fund, as you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Boston, MA to create your self-employed retirement plan offers significant tax advantages that enable your business to grow and succeed.
Few Boston, MA wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs 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 we have a rich history of assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement go far beyond simple financial figures, and we are dedicated to provide personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Boston, MA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Boston, MA today.
Why Boston, MA 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 real benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Boston, MA enables you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when income is lower, so your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—an advantageous choice if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for additional deductions as a business owner. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax 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: Spreading your investments across different asset classes like stocks and bonds can help reduce risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net helps you avoid tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Boston, MA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Boston, MA business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These plans can provide the reliable income you’ll need in the future. It’s important to note that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings ensure a stable foundation during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you gain control over 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 Boston, MA Now?
Time is one of the most crucial factors in retirement planning. Getting a head start not only helps you grow a more substantial retirement fund but also lowers the financial burden of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a significant impact on the savings you’ll have when you stop working. The main reason is compound interest—the financial principle where your investments grow, and those returns, in turn, generate even more returns. The longer your money has to grow, the greater the impact of compounding.
Example: Two individuals, Alex and Taylor are both entrepreneurs. 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 make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create substantial growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: If you invest $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: Saving the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Outcomes may change due to variables including market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Boston, MA, it is often the case that you focus more on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Benefit from growth that is tax-deferred or tax-free withdrawals down the road.
- Benefit from contribution flexibility that adapt to your earnings.
- Create a long-term safety measure that provides security, no matter how your business develops.
The sooner you start, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the opportunity to concentrate on your goals—both for your retirement years and your Boston, MA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Boston, MA, each offering its own pros and cons. A financial advisor will guide you to learn about the benefits and drawbacks of each plan and identify the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Boston, MA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals 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 is a retirement plan that permits those who are self-employed 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 more than 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs function like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower 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: A Solo 401(k) plan, also called 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 are similar to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish 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:
- Deferrals as an employee of up to 100% of your self-employed earnings, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, 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+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll receive in retirement. This strategy is recommended for high-earning entrepreneurs who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income in 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 typically recommended for those over 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who want to invest 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
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Boston, MA for Your Self-Employed Retirement Plan
Working with a financial advisor in Boston, MA experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a personalized approach that reflects your aspirations. Your advisor in Boston, MA 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 features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Boston, MA: Correct Capital's Process
Entrepreneurs in Boston, MA who don’t have the time or expertise to oversee their self-employed retirement plan on their own can become overwhelmed by their choices. With Correct Capital, our Boston, MA financial advisors manage the lion's share of your savings plan setup for you, working to make meeting your future savings targets as straightforward as possible for you. We can help you get set 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 will assess if we're a good fit for you and your business. This brief introduction helps us get a sense of your goals with no pressure or significant effort 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 existing financial picture, and your retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and go over your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. Throughout our relationship, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Boston, MA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Boston, MA include:
- 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
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Boston, MA
Your business isn't "just a business" to you, and your Boston, MA financial advisors should provide more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Boston, MA clients 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.
