Self-employed retirement plans Escondido, CA. The flexibility of being your own boss in Escondido, CA is one of the greatest advantages of working for yourself. That said, this freedom sometimes brings with certain challenges, especially when it comes to planning for retirement, since you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from understanding their retirement options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Escondido, CA to establish your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Escondido, CA investment consulting and retirement planning firms truly grasp the challenges faced by small business owners better than 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 helping businesses with their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to simple financial figures, and we work tirelessly to offer personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Escondido, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Escondido, CA today.
Why Escondido, CA 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. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Escondido, CA helps you design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, so your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you might access extra deductions as a business owner. These regional incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a 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 requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives can help reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Escondido, CA Business
A thoughtful retirement strategy can assist you think through what’s next with your Escondido, CA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These savings offer the reliable income you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg offer the funds you need during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Escondido, CA Now?
Time remains one of the most valuable factors for building your retirement fund. Beginning sooner rather than later not only allows you to build a bigger financial cushion but also reduces the financial burden of playing catch-up as you get older. This is why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the powerful process where your investments earn returns, and those returns, then, generate even more returns. The greater time span your money has to grow, the more significant the effect of this growth.
Example: Taylor and Alex are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 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
Small, consistent savings invested steadily may result in significant growth. Take a look at this scenario showing the power of compound interest:
- Starting at age 25: If you invest $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 yields only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are estimates calculated using 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. This information is meant to provide general guidance and do not guarantee future performance. Your individual results may differ depending on factors such as market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Escondido, CA, it can be tempting to put more emphasis on reinvesting in your business over saving for retirement. That said, starting a plan now enables you to:
- Benefit from tax-deferred growth or withdrawals without taxes later on.
- Enjoy flexible contributions that change with your income.
- Build a safety net that ensures stability, no matter how your business develops.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the freedom to focus on your dreams—both for your retirement years and your Escondido, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for those working for themselves in Escondido, CA, each offering its own advantages and considerations. A financial advisor will guide you to learn about the pros and cons of each option and determine the one ideal for your needs. In most cases, your self-employed retirement plan options in Escondido, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer specific tax advantages. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped 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 is a retirement plan that enables those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions 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 have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan may be ideal for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed 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 savings option for the self-employed intended for businesses with no employees or where the only employee is a spouse. Solo 401(k)s are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which have 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 have the ability to make two types of contributions:
- Elective 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 are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is defined as 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 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll have in retirement. This option is best suited for wealthier professionals who are focused on saving a large amount for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's most commonly advised for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Organizations that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary based on your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in Escondido, CA for Your Self-Employed Retirement Plan
A financial advisor in Escondido, CA focused on self-employed retirement strategies serves as an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a personalized approach that aligns with your goals. A financial advisor in Escondido, CA will review your finances, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance 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 Escondido, CA: Correct Capital's Process
Escondido, CA business owners who aren’t equipped with the time or understanding to handle their own retirement planning on their own often feel overwhelmed when faced with their options. At Correct Capital, our Escondido, CA financial advisors take on the majority of your retirement planning for you, to help make meeting your retirement goals 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 determine if we're suited to your needs for you and your business. This brief introduction lets us understand what you're looking for with no pressure or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your existing financial picture, and your future objectives. This helps us create a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll schedule a meeting and review your plan thoroughly to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Escondido, CA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Escondido, CA include:
- Investment Management
- 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 Escondido, CA
To you, your business is more than "just a business", and your Escondido, CA financial advisors must deliver more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Escondido, CA, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
