Self-employed retirement plans Buffalo, NY. The flexibility of running your own company in Buffalo, NY is one of the best aspects of working for yourself. However, this independence can come with a lack of security, particularly in terms of building your retirement fund, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to having a financially stable retirement, partnering with a financial advisor in Buffalo, NY to set up your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Buffalo, NY financial advisory and retirement planning firms understand the needs of self-employed individuals as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to simple financial figures, and we strive to create customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Buffalo, NY, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Buffalo, NY today.
Why Buffalo, NY Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer real benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Buffalo, NY enables you to design your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the freedom to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when revenues are down, ensuring your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for additional deductions as a business owner. These local incentives help make these plans even more valuable.
- 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 they contribute a retirement plan, helping to lower 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 a mix of stocks, bonds, and other assets serves to reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid dipping into savings during challenging periods and risking extra costs.
Plan for the Future of Your Buffalo, NY Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Buffalo, NY business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and don’t transfer with the business. These savings ensure the reliable income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts ensure financial security as you make this shift. You can also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes on the sale.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Buffalo, NY Now?
Time remains one of the most crucial assets for building your retirement fund. Getting a head start not only allows you to build a bigger financial cushion but also lowers the financial burden of catching up later in life. The following are reasons 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 total you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, earn even more returns. The more time your money has to grow, the larger the effect of this growth.
Example: Taylor and Alex are both self-employed professionals. They each aim 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 saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to 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 expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving 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.
Saving early, the lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Buffalo, NY, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes later on.
- Take advantage of contribution flexibility that align with your income.
- Build a financial cushion 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. Saving for retirement now means gaining control over your financial future and giving yourself the opportunity to concentrate on your goals—both for your future retirement and your Buffalo, NY business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Buffalo, NY, each offering its own pros and cons. A financial advisor is available to help you understand the pros and cons of each option and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Buffalo, NY include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $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 serves as a retirement savings option that enables 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) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for companies with 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 conventional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish 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
If you’re self-employed, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses without employees or when the sole employee is your spouse. This type of plan 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 extra savings options can be balanced by more restricted investment choices. Using a solo 401(k), 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: 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-employed earnings, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- 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.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a set amount to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll get in retirement. This plan is recommended for higher-income entrepreneurs who want to save a large amount for retirement and are prepared to contribute substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees can open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans are:
- Partners or owners 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
- Organizations that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your income, age, and retirement goals. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Buffalo, NY for Your Self-Employed Retirement Plan
A financial advisor in Buffalo, NY specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a personalized approach that matches your objectives. Your advisor in Buffalo, NY will evaluate your financial situation, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Buffalo, NY: Correct Capital's Process
Entrepreneurs in Buffalo, NY who aren’t equipped with the time or understanding to oversee their own retirement planning independently may end up overwhelmed by their available plans. At Correct Capital, our Buffalo, NY financial advisors take on the bulk of your savings plan setup for you, working to make meeting your retirement goals 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: 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 short conversation lets us understand what you're looking for with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your existing financial picture, and your retirement goals. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and go over your plan in detail 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 start saving. Over the course of our partnership, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Buffalo, NY financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Buffalo, NY 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 Buffalo, NY
You don't see your business as "just a business", and your Buffalo, NY financial advisors need to offer more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. To every client in Buffalo, NY, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
