Self-employed retirement plans Lakewood, CO. The flexibility of being your own boss in Lakewood, CO offers many benefits of being self-employed. However, this independence sometimes brings with a lack of security, notably when it comes to building your retirement fund, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off looking into other possibilities. In addition to enjoying a more secure retirement, working with a financial advisor in Lakewood, CO to set up your self-employed retirement plan can provide significant tax advantages that enable you to move your business forward.
Few Lakewood, CO investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement go far beyond simple financial figures, and we strive to create personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Lakewood, CO, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Lakewood, CO today.
Why Lakewood, CO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver tangible benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in Lakewood, CO helps you customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when your earnings dip, so that your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—a wise move if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you could qualify for extra deductions as a self-employed individual. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax 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
Building a secure retirement goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets serves to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund ensures you don’t tapping into your nest egg during challenging periods and risking extra costs.
Plan for the Future of Your Lakewood, CO Business
Preparing for retirement enables you to prepare for what’s next with your Lakewood, CO business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These savings offer the steady income you’ll need in the future. Remember that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or a maximum of $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 are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts offer a stable foundation through the transition. You may also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the best-fit retirement 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 Lakewood, CO Now?
There’s no denying that time is one of the most crucial resources for building your retirement fund. Starting early not only allows you to build a larger nest egg but also reduces the pressure of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the amount you’ll have when you stop working. The primary reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the greater the impact of this compounding process.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is 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 puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time can lead to substantial growth. Here’s a simple scenario showing the impact of consistent growth:
- 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: Saving the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*The figures provided in this example are based on estimates calculated using 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. This information is intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ due to factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Lakewood, CO, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. However, beginning a plan now gives you the chance to:
- Leverage growth that is tax-deferred or penalty-free withdrawals down the road.
- Take advantage of adjustable savings that adapt to your cash flow.
- Establish a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the ability to focus on your objectives—both for your retirement years and your Lakewood, CO business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for entrepreneurs in Lakewood, CO, each with its own advantages and considerations. A financial advisor can help you evaluate the pros and cons of each plan and determine the one ideal for your unique situation. Typically, your self-employed retirement plan options in Lakewood, CO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer 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 IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows self-employed individuals to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions above the 25% you (the employer) allocate. 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, the amount eligible to be contributed 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 where the only employee is a spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which share 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 have the ability to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, 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.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll have in retirement. This strategy is best suited for high-earning entrepreneurs who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly recommended for people above age 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who want to invest more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Lakewood, CO for Your Self-Employed Retirement Plan
Partnering with an advisor in Lakewood, CO specialized in self-employed retirement plans can be an important asset for entrepreneurs. They have the expertise to help guide you through the challenges of retirement planning and develop a personalized approach 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 selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Guide you in choosing a plan that suits your unique requirements
- Customize the plan to your needs even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Deliver continuous support and financial insights 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 Lakewood, CO: Correct Capital's Process
Self-employed individuals in Lakewood, CO who lack the time, interest, or knowledge to handle their retirement savings strategy on their own often feel overwhelmed as they look at their available plans. With Correct Capital, our Lakewood, CO financial advisors handle the bulk of your retirement strategy 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: In just 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This initial call lets us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including your employee count, your current financial situation, and your future objectives. This allows us to put together a custom plan designed just for you.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll meet with you and review your plan step by step to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. Over the course of our partnership, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Lakewood, CO financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Lakewood, CO include:
- 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
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Lakewood, CO
To you, your business is more than "just a business", and your Lakewood, CO financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Lakewood, CO benefit from our I.O.U. promise: all of the advice you get from us 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.
