Self-employed retirement plans Colorado Springs, CO. The flexibility of being your own boss in Colorado Springs, CO offers many benefits of being self-employed. However, this flexibility can come with potential drawbacks, particularly when it comes to planning for retirement, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from understanding their retirement options. In addition to enjoying a more secure retirement, working with a financial advisor in Colorado Springs, CO to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Colorado Springs, CO financial advisory and retirement planning firms understand the needs of small business owners 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 take pride in supporting entrepreneurs with their retirement planning needs. We understand that your professional and personal aspirations extend well past just monetary concerns, and we are dedicated to create customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Colorado Springs, CO, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Colorado Springs, CO today.
Why Colorado Springs, CO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Colorado Springs, CO allows you to create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and cut back when your earnings dip, so that your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, 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: In some states, you may be eligible for additional deductions as a self-employed individual. These local incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing 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 about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and other assets is a smart way to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Colorado Springs, CO Business
Retirement planning enables you to think through what’s next with your Colorado Springs, CO business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts offer the reliable income you’ll need later on. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure the funds you need through the transition. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the right retirement plan, you gain control over your financial future, lower your tax bill, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Colorado Springs, CO Now?
Time is one of the most important factors for building your retirement fund. Getting a head start not only helps you grow a more substantial retirement fund but also minimizes the stress of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the amount you’ll have when you retire. The biggest reason is compound interest—the concept where your investments grow, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the larger the effect of compounding.
Example: Two individuals, Alex and Taylor 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 waits until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create impressive growth. Consider this example showing the effect of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected 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 gap of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The numbers shown in this scenario are based on 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. This information is for illustrative purposes only and cannot predict actual future outcomes. Outcomes may change due to factors such as market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Colorado Springs, CO, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. Even so, beginning a plan now gives you the chance to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy contribution flexibility that change with your cash flow.
- Create a long-term safety measure that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means managing your financial future and creating for yourself the opportunity to turn your attention to your goals—both for your future retirement and your Colorado Springs, CO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Colorado Springs, CO, each providing its own advantages and considerations. A financial advisor can help you learn about the benefits and drawbacks of each option and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Colorado Springs, CO consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are available to anyone with taxable earnings.
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: SEP IRAs serves as a retirement savings option that enables entrepreneurs 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) cannot make additional contributions 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 set monetary value or a percentage of wages to employee accounts. This type of plan works well for entrepreneurs facing cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs operate like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for companies that have no employees or when the sole employee is your spouse. These plans operate much like 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 versus SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. 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: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, up to 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.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine the precise amount they'll get in retirement. This option is best suited for higher-income entrepreneurs who are focused on saving a large amount for retirement and are willing to make larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals managing a one-person company or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly advised for people above age 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary using your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Colorado Springs, CO for Your Self-Employed Retirement Plan
Working with a financial advisor in Colorado Springs, CO experienced with retirement plans for the self-employed can be an important asset for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and develop a customized plan that aligns with your goals. A financial advisor in Colorado Springs, CO will evaluate your financial situation, determine how much risk you’re comfortable with, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- 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 in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Track and fine-tune 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 Colorado Springs, CO: Correct Capital's Process
Entrepreneurs in Colorado Springs, CO who aren’t equipped with the time or understanding to manage their own retirement planning independently can become overwhelmed when faced with their choices. With Correct Capital, our Colorado Springs, CO financial advisors manage the majority of your retirement planning for you, working to make meeting your retirement goals as straightforward as possible for you. We are here to assist you in setting up 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 help understand if we're a good fit for you and your business. This short conversation allows us to get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your current financial situation, and your future objectives. This allows us to put together a custom plan designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and review your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. As time goes on, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Colorado Springs, CO financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Colorado Springs, 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 Colorado Springs, CO
You don't see your business as "just a business", and your Colorado Springs, CO financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. To every client in Colorado Springs, CO, 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, call Correct Capital today at 877-930-401k or contact us online.
