Self-employed retirement plans Bridgeport, CT. The flexibility of running your own company in Bridgeport, CT is one of the best aspects of working for yourself. Even so, this flexibility can come with certain challenges, particularly when it comes to building your retirement fund, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from looking into other possibilities. In addition to enjoying a more secure retirement, partnering with a financial advisor in Bridgeport, CT to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Bridgeport, CT wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your professional and personal aspirations go far beyond simple financial figures, and we are dedicated to create personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Bridgeport, CT, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Bridgeport, CT today.
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Why Bridgeport, CT Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer immediate benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Bridgeport, CT allows you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Save extra during successful years and cut back when revenues are down, so your plan fits your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw tax-free later—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer 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 compound.
- State-Specific Incentives: Depending on where you live, you might access additional credits as a sole proprietor. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax 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 isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds is a smart way to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Bridgeport, CT Business
Retirement planning can assist you think through what’s next with your Bridgeport, CT business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and 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. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer a stable foundation through the transition. You may also work with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Bridgeport, CT Now?
There’s no denying that time is one of the most valuable assets in retirement planning. Starting early not only helps you grow a more substantial retirement fund but also minimizes the pressure of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a significant impact on the amount you’ll have when you stop working. The main reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the larger the impact of this compounding process.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $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, assuming 7% annual return:
- Alex puts in $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 can lead to significant growth. Take a look at this scenario showing the impact 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 end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are based on estimates derived from 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 for illustrative purposes only and do not guarantee future performance. Actual results may vary based on factors such as market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Bridgeport, CT, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. Even so, starting a plan now allows you to:
- Benefit from tax-deferred growth or tax-free withdrawals later on.
- Benefit from contribution flexibility that align with your income.
- Build a financial cushion that ensures stability, no matter how your business develops.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the freedom to concentrate on your objectives—both for your future retirement and your Bridgeport, CT business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Bridgeport, CT, each providing its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and identify the one ideal for your needs. In most cases, your self-employed retirement plan options in Bridgeport, CT are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer distinct tax benefits. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of 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, both traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that allows those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) would not be able to contribute beyond the 25% you (the employer) allocate. If you have employees, you must 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 works well for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs function like standard IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 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), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential often come with more limited investment options. 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: Solo 401(k)s are available solely to 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 have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, 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 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll have in retirement. This option is best suited for wealthier self-employed individuals who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly recommended 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 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Companies showing consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions is calculated by an actuary using your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Bridgeport, CT for Your Self-Employed Retirement Plan
Working with a financial advisor in Bridgeport, CT focused on self-employed retirement strategies can be an invaluable resource for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and design a customized plan that reflects your aspirations. An expert in your area will review your finances, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Provide ongoing education and advice to help you navigate your retirement journey
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Bridgeport, CT: Correct Capital's Process
Self-employed individuals in Bridgeport, CT who aren’t equipped with the time or understanding to manage their retirement savings strategy on their own may end up overwhelmed as they look at their options. At Correct Capital, our Bridgeport, CT financial advisors take on the bulk of your savings plan setup for you, to help make meeting your retirement goals as easy 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: In just 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This brief introduction allows us to learn about your needs with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including how many employees you have (if any), your current financial situation, and your retirement goals. This helps us create a personalized strategy suited specifically for your needs.
- 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 in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and track your progress to ensure it stays suited to your needs.
Our Bridgeport, CT financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Bridgeport, CT 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 Bridgeport, CT
To you, your business is more than "just a business", and your Bridgeport, CT financial advisors must deliver more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. We offer all our Bridgeport, CT clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
