Self-employed retirement plans Lancaster, CA. The independence of owning your own business in Lancaster, CA is one of the best aspects of working for yourself. That said, this flexibility sometimes brings with a lack of security, notably in terms of building your retirement fund, since you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Lancaster, CA to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Lancaster, CA financial advisory and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and our firm have a rich history of helping businesses with their retirement planning needs. We know that your goals for your business and retirement extend well past simple financial figures, and we are dedicated to create tailored solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Lancaster, 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 Lancaster, CA today.
Why Lancaster, CA 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. With customizable contribution options to considerable tax savings, consulting a financial advisor in Lancaster, CA enables you to create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Save extra during successful years and scale back when your earnings dip, ensuring your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for extra deductions as a sole proprietor. These state-level incentives help 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 contributed a retirement plan, further reducing 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and other assets serves to mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Lancaster, CA Business
Preparing for retirement also helps you think through what’s next with your Lancaster, CA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours 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, retirement plan contributions are capped at annual limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide a stable foundation during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Lancaster, CA Now?
Time is one of the most crucial resources when it comes to saving for retirement. Starting early not only lets you accumulate a bigger financial cushion but also reduces the financial burden 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 may cause a major impact on the total you’ll have when you retire. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the greater the benefit of compounding.
Example: Two individuals, Alex and Taylor are both self-employed individuals. 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, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Consider this example showing the impact of compounding:
- Starting at age 25: Putting aside $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 would result in only $235,412.97* by age 65—a shortfall of over $260,000, all because of 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 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 for illustrative purposes only and do not guarantee future performance. Actual results may vary based on variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Lancaster, CA, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. However, starting a plan now gives you the chance to:
- Take advantage of tax-free future growth or tax-free withdrawals later on.
- Take advantage of adjustable savings that change with your cash flow.
- Create a financial cushion that offers peace of mind, 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. Saving for retirement now means taking control of your financial future and creating for yourself the freedom to focus on your dreams—both for your future retirement and your Lancaster, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for self-employed individuals in Lancaster, CA, each with its own advantages and considerations. A financial advisor will guide you to evaluate the benefits and drawbacks of each plan and choose the one ideal for your needs. In most cases, your self-employed retirement plan options in Lancaster, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but retirement distributions are taxed as income. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both cases, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits entrepreneurs to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions more than the 25% you (the employer) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for businesses that experience cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where contributions are made with pre-tax money 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses with no employees or if the only employee is your spouse. These plans 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 offers more savings than SEPs or IRAs; however, the increased savings potential often come with more limited investment options. 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 may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus 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 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know the precise amount they'll get in retirement. This plan is ideal for higher-income entrepreneurs who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically recommended for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary based on your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Lancaster, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Lancaster, CA specialized in self-employed retirement plans serves as an invaluable resource for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a personalized approach that aligns with your goals. An expert in your area will assess where you stand financially, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Offer continued financial education and guidance to help you navigate your retirement journey
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Lancaster, CA: Correct Capital's Process
Self-employed individuals in Lancaster, CA who aren’t equipped with the time or understanding to manage their own retirement planning independently may end up overwhelmed by their choices. With Correct Capital, our Lancaster, CA financial advisors handle the bulk of your retirement planning for you, and strive to ensure meeting your financial objectives as easy as possible for you. We will guide you in creating your self-employed retirement plan in just four 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 short conversation allows us to understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This helps us create a custom plan suited specifically for your needs.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and review your plan thoroughly 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. Throughout our relationship, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Lancaster, CA financial advisors and retirement plan consultants act 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 Lancaster, CA include:
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Lancaster, CA
Your business isn't "just a business" to you, and your Lancaster, 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 deliver personalized self-employed retirement plans. All our clients in Lancaster, CA 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, contact Correct Capital now at 877-930-401k or contact us online.
