Self-employed retirement plans Lakewood, CO. The freedom of being your own boss in Lakewood, CO is one of the best aspects of having a self-directed career. That said, this flexibility can come with certain challenges, especially regarding retirement savings, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to having a financially stable retirement, working with a financial advisor in Lakewood, CO to set up your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Lakewood, CO financial advisory and retirement planning firms truly grasp the challenges faced by entrepreneurs better than Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to just monetary concerns, and we are dedicated to offer customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Lakewood, CO, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed 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 provide real benefits today. From flexible contributions to significant tax savings, working with a financial advisor in Lakewood, CO enables you to create your retirement plan to align with 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 adjust how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when income is lower, so your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw without tax penalties in the future—a wise move if you expect 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 shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: In some states, you could qualify for state-specific tax breaks as a sole proprietor. These regional incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax 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: Distributing your investments across a mix of stocks, bonds, and alternatives serves to minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t dipping into savings during tough times and facing tax penalties.
Plan for the Future of Your Lakewood, CO Business
Retirement planning enables you to plan ahead 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 remain your personal assets and are not part of the sale. These accounts can provide the steady income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions 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’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide a stable foundation during the change. You might want to work with a financial advisor experienced in both succession and retirement strategies to help with taxes associated with the transaction.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Lakewood, CO Now?
Time is one of the most important factors in retirement planning. Beginning sooner rather than later not only allows you to build a larger nest egg but also lowers the stress of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the amount you’ll have when you stop working. The biggest reason is compound interest—the financial principle where your investments grow, and those returns, in turn, generate even more returns. The more time your money has to grow, the larger the effect of compounding.
Example: Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Here’s a simple scenario showing the impact 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 leaves you with only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates generated with 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. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Your individual results may differ due to factors such as market conditions, fees, and your unique situation. 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 prioritize reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Enjoy contribution flexibility that align with your earnings.
- Create a financial cushion that ensures stability, no matter how your business evolves.
Starting early, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and allowing yourself the opportunity to concentrate on your goals—both for your future retirement and your Lakewood, CO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Lakewood, CO, each providing its own advantages and considerations. A financial advisor can help you evaluate the benefits and drawbacks of each plan and identify the one most suitable for your needs. In most cases, your self-employed retirement plan options in Lakewood, CO 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 returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are accessible for individuals with a source of 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: SEP IRAs serves as a retirement savings option that permits entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for companies that have no employees or if the only employee is your spouse. These plans function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options often come with 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: Only business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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 earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $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) must not surpass 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll get in retirement. This strategy is recommended for wealthier self-employed individuals who aim to accumulate a large amount for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees can open an individual defined benefit plan, but it's generally advised for people above age 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute 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
- Companies showing consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary determined by your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Lakewood, CO for Your Self-Employed Retirement Plan
Working with a financial advisor in Lakewood, CO specialized in self-employed retirement plans is an invaluable resource for those working for themselves. They offer the knowledge to assist understand the intricacies of saving for retirement and develop a personalized approach that reflects your aspirations. A financial advisor in Lakewood, CO will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt 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 when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Lakewood, CO: Correct Capital's Process
Lakewood, CO business owners who lack the time, interest, or knowledge to manage their own retirement planning independently can become overwhelmed as they look at their options. At Correct Capital, our Lakewood, CO financial advisors manage the majority of your savings plan setup for you, to help make meeting your financial objectives as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This initial call lets us learn about your needs with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your present financial standing, and your long-term savings targets. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and discuss your plan in detail to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can begin contributing. As time goes on, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Lakewood, CO financial advisors and retirement plan consultants act as fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Lakewood, CO 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 Lakewood, CO
Your business isn't "just a business" to you, and your Lakewood, CO financial advisors should provide more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Lakewood, CO benefit from our I.O.U. promise: everything we recommend 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.
