Self-employed retirement plans Colorado Springs, CO. The flexibility of being your own boss in Colorado Springs, CO is one of the greatest advantages of being self-employed. However, this independence can come with potential drawbacks, notably regarding retirement savings, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to achieving a more comfortable retirement, working with a financial advisor in Colorado Springs, CO to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Colorado Springs, CO investment consulting and retirement planning firms understand the needs of entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (check out 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 basic numbers, and we work tirelessly to create customized solutions aligned with your vision. 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 talk to a small business financial advisor in Colorado Springs, CO 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 Colorado Springs, CO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver real benefits today. From flexible contributions to considerable tax savings, partnering with a financial advisor in Colorado Springs, CO allows 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) gives you the freedom to modify how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when revenues are down, ensuring your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you keep more of your hard-earned money.
- 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: Depending on where you live, you may be eligible for extra tax breaks as a self-employed individual. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for 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
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of asset classes like stocks and bonds serves to mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid dipping into savings during financial hardships and incurring penalties.
Plan for the Future of Your Colorado Springs, CO Business
Preparing for retirement also helps you think through what’s next with your Colorado Springs, CO business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts offer the steady income you’ll need later on. It’s important to note that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide the funds you need through the transition. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and build a strong framework 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 valuable resources in retirement planning. Starting early not only helps you grow a larger nest egg but also reduces the pressure of playing catch-up as you get older. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the amount you’ll have when you retire. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, then, generate even more returns. The more time your money has to grow, the more significant the effect of compounding.
Example: Taylor and Alex are both entrepreneurs. 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, using a projected 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily 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 difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. These examples are intended as illustrative examples and do not guarantee future performance. Your individual results may differ depending on elements like market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Colorado Springs, CO, it might seem easier to prioritize reinvesting in your business rather than saving for retirement. Even so, beginning a plan now enables you to:
- Take advantage of tax-free future growth or penalty-free withdrawals later on.
- Benefit from flexible contributions that change with your cash flow.
- Establish a financial cushion that provides security, no matter how your business changes.
Starting early, the less you’ll have to worry about catching up later in life. Building your retirement savings today means managing your financial future and allowing yourself the freedom to turn your attention to your goals—both for your future retirement and your Colorado Springs, CO business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Colorado Springs, CO, each providing its own benefits and trade-offs. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and choose the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Colorado Springs, CO are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are tax-free. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals with an earned 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: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that permits those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute beyond the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses without employees or if the only employee is your spouse. These plans function similarly to employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. 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: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 if you attain age 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 self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll have in retirement. This strategy is best suited for wealthier entrepreneurs who want to save a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's generally suggested for people above age 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans tend to be:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Colorado Springs, CO for Your Self-Employed Retirement Plan
A financial advisor in Colorado Springs, CO focused on self-employed retirement strategies can be an important asset for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and design a customized plan that aligns with your goals. An expert in your area will review your finances, identify your risk preferences, and assist you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Colorado Springs, CO: Correct Capital's Process
Self-employed individuals in Colorado Springs, CO who aren’t equipped with the time or understanding to oversee their self-employed retirement plan independently can become overwhelmed by their options. With Correct Capital, our Colorado Springs, CO financial advisors handle the lion's share of your retirement strategy for you, to help make meeting your future savings targets as easy as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if our services align for you and your business. This brief introduction allows us to understand what you're looking for with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including whether you have employees, your existing financial picture, and your future objectives. This enables us to craft 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 thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can begin contributing. Throughout our relationship, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our Colorado Springs, CO financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Colorado Springs, CO 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 Colorado Springs, CO
To you, your business is more than "just a business", and your Colorado Springs, CO financial advisors should provide more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide customized self-employed retirement plans. We offer all our Colorado Springs, CO clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
