Self-employed retirement plans Long Beach, CA. The independence of running your own company in Long Beach, CA is one of the best aspects of working for yourself. That said, this independence sometimes brings with potential drawbacks, notably when it comes to retirement savings, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to enjoying a financially stable retirement, working with a financial advisor in Long Beach, CA to create your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Long Beach, CA wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past simple financial figures, and we are dedicated to create customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Long Beach, CA, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Long Beach, CA today.
Why Long Beach, 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 offer immediate benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Long Beach, CA enables you to design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when income is lower, so your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for state-specific credits as a self-employed individual. These regional incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across varied asset classes like stocks and bonds is a smart way to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund prevents you from using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Long Beach, CA Business
Retirement planning enables you to think through what’s next with your Long Beach, CA 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 savings offer the steady income you’ll need during retirement. Remember that while selling a business often leads to 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, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide financial security through the transition. You may also partner with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens during the sale.
With the best-fit retirement strategy, 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 Long Beach, CA Now?
There’s no denying that time is one of the most valuable factors in retirement planning. Getting a head start not only allows you to build a more substantial retirement fund but also minimizes the pressure of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you retire. The main reason is compound interest—the concept where your investments generate earnings, and those returns, then, generate even more returns. The more time your money has to grow, the larger the effect of compounding.
Example: Taylor and Alex are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in impressive growth. Consider this example showing the power of consistent growth:
- Starting at age 25: By investing $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 yields only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
The earlier you begin, the less you need to save each year to reach your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and are not a promise of future results. Outcomes may change based on factors such as 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 Long Beach, CA, it is often the case that you prioritize reinvesting in your business over saving for retirement. Even so, beginning a plan now gives you the chance to:
- Leverage growth that is tax-deferred or withdrawals without taxes in the future.
- Enjoy adjustable savings that adapt to your cash flow.
- Create a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and giving yourself the freedom to concentrate on your goals—both for your golden years and your Long Beach, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for those working for themselves in Long Beach, CA, each with its own pros and cons. A financial advisor can help you evaluate the benefits and drawbacks of each plan and choose the one best suited for your needs. In most cases, your self-employed retirement plan options in Long Beach, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. 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 cases, withdrawals don’t incur 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 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: The Simplified Employee Pension IRA serves as a retirement savings option that enables those who are self-employed to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, 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. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing periods of inconsistent earnings. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and 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
For self-employed individuals, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or if the only employee is your spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings versus 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: Only 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 can make two types of contributions:
- Elective deferrals (as an employee) 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.
- 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 employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 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 provides a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but lets individuals clearly understand what they'll have in retirement. This plan is recommended for higher-income entrepreneurs who are focused on saving a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's most commonly recommended for those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The contribution limit is calculated by an actuary using your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Long Beach, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Long Beach, CA specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. A financial advisor in Long Beach, CA will review your finances, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Formalize a plan in writing in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand 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
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Long Beach, CA: Correct Capital's Process
Entrepreneurs in Long Beach, CA who aren’t equipped with the time or understanding to manage their retirement savings strategy on their own often feel overwhelmed by their available plans. At Correct Capital, our Long Beach, CA financial advisors take on the bulk of your retirement strategy for you, to help make meeting your retirement goals as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if our services align for you and your business. This brief introduction allows us to learn about your needs with no obligation or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and review your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll have regular meetings and track your progress to make sure it remains aligned with your goals.
Our Long Beach, CA financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Long Beach, CA include:
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
Call Correct Capital for Your Self-Employed Retirement Plan in Long Beach, CA
To you, your business is more than "just a business", and your Long Beach, CA financial advisors must deliver more than basic financial recommendations. At Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. To every client in Long Beach, CA, we provide 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, call Correct Capital today at 877-930-401k or contact us online.
