Self-employed retirement plans Honolulu, HI. The flexibility of running your own company in Honolulu, HI is one of the greatest advantages of working for yourself. That said, this flexibility often comes with potential drawbacks, particularly in terms of retirement savings, as you don't have access to employer-sponsored retirement plans. 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, working with a financial advisor in Honolulu, HI to establish your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Honolulu, HI financial advisory and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations extend well past just monetary concerns, and we strive to provide personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Honolulu, HI, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Honolulu, HI today.
Why Honolulu, HI Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide real benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Honolulu, HI enables you to create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when revenues are down, so your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to 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 powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for extra tax breaks as a business owner. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 contributed 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 linked to the way you invest:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and alternatives can help mitigate financial risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Honolulu, HI Business
Preparing for retirement enables you to think through what’s next with your Honolulu, HI business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These accounts can provide the steady income you’ll need during retirement. Remember that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement savings provide a stable foundation as you make this shift. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Honolulu, HI Now?
There’s no denying that time is one of the most crucial factors in retirement planning. Beginning sooner rather than later not only allows you to build a larger nest egg but also reduces the stress of catching up later in life. Here’s 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 reach retirement age. The main reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, generate even more returns. The more time your money has to grow, the larger the effect of compounding.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is 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 contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily can lead to substantial growth. Here’s a simple scenario showing the power of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $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, just from a 10-year delay.
Saving early, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, based on 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 are not a promise of future results. Your individual results may differ due to elements like market conditions, fees, and individual circumstances. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Honolulu, HI, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. However, beginning a plan now gives you the chance to:
- Take advantage of tax-deferred growth or withdrawals without taxes down the road.
- Enjoy flexible contributions that adapt to your income.
- Establish a long-term safety measure that provides security, no matter how your business evolves.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means managing your financial future and allowing yourself the freedom to concentrate on your objectives—both for your golden years and your Honolulu, HI business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Honolulu, HI, each providing its own advantages and considerations. A financial advisor can help you understand the pros and cons of each plan and choose the one best suited for your circumstances. In most cases, your self-employed retirement plan options in Honolulu, HI include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxed as income. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both cases, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that permits self-employed individuals to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) allocate. If you have employees, it's required to 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 fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs operate like traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can set up 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, sometimes referred to 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 if the only employee is your spouse. Solo 401(k)s function similarly to standard 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for 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 share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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-employment income, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (as of 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 fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll get in retirement. This plan is ideal for wealthier entrepreneurs 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 are taxed as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's typically recommended for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary determined by your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Honolulu, HI for Your Self-Employed Retirement Plan
Working with a financial advisor in Honolulu, HI specialized in self-employed retirement plans 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 reflects your aspirations. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- 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
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Honolulu, HI: Correct Capital's Process
Entrepreneurs in Honolulu, HI who aren’t equipped with the time or understanding to handle their retirement savings strategy themselves may end up overwhelmed when faced with their choices. Through our team at Correct Capital, our Honolulu, HI financial advisors handle the lion's share of your retirement planning for you, working to make meeting your financial objectives as easy as possible for you. We can help you get set up 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 we're suited to your needs for you and your business. This initial call allows us to understand what you're looking for with no pressure or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your present financial standing, and your retirement goals. This enables us to craft a tailored approach designed just for you.
- Review Your Plan: After we put together a plan using the information you provide, we'll meet with you and discuss your plan step by step to make sure it's clear 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. Throughout our relationship, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Honolulu, HI financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Honolulu, HI include:
- Roth Conversion
- 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 Honolulu, HI
Your business isn't "just a business" to you, and your Honolulu, HI financial advisors need to offer more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. To every client in Honolulu, HI, 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, reach out to Correct Capital at 877-930-401k or contact us online.
