Self-employed retirement plans Lubbock, TX. The flexibility of owning your own business in Lubbock, TX is one of the greatest advantages of having a self-directed career. Even so, this freedom often comes with potential drawbacks, notably when it comes to building your retirement fund, as you don't have the benefit of retirement programs through an employer. 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, working with a financial advisor in Lubbock, TX to set up your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Lubbock, TX wealth management and retirement planning firms understand the needs of small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and we have a rich history of 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 create tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Lubbock, TX, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Lubbock, TX today.
Why Lubbock, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide real benefits today. With customizable contribution options to substantial tax savings, consulting a financial advisor in Lubbock, TX enables you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when your earnings dip, ensuring your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: In some states, you may be eligible for extra tax breaks as a sole proprietor. These regional incentives 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 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds serves to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid tapping into your nest egg during tough times and incurring penalties.
Plan for the Future of Your Lubbock, TX Business
A thoughtful retirement strategy can assist you think through what’s next with your Lubbock, TX business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings can provide the financial stability you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer a stable foundation as you make this shift. You can also partner with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the proper savings strategy, you can take control of your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Lubbock, TX Now?
Time remains one of the most crucial resources for building your retirement fund. Starting early not only lets you accumulate a larger nest egg but also minimizes the pressure of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement can have a significant impact on the amount you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, accumulate even more returns. The more time your money has to grow, the greater the effect of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in significant growth. Here’s a simple scenario showing the power of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return 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 gap of over $260,000, just from a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates derived from NerdWallet’s Compound Interest Calculator, assuming 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 meant to provide general guidance and do not guarantee future performance. Outcomes may change due to variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Lubbock, TX, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of tax-free future growth or tax-free withdrawals down the road.
- Benefit from flexible contributions that align with your income.
- Establish a safety net that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about making up for lost time later in life. Building your retirement savings today means taking control of your financial future and allowing yourself the freedom to focus on your dreams—both for your retirement years and your Lubbock, TX business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Lubbock, TX, each providing its own pros and cons. A financial advisor will guide you to evaluate the pros and cons of each choice and choose the one ideal for your needs. Generally speaking, your self-employed retirement plan options in Lubbock, TX consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, you must 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. This type of plan is a good option for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make 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 savings option for the self-employed designed for businesses with no employees or if the only employee is your spouse. Solo 401(k)s are similar to standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. 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: Solo 401(k)s are available solely to business owners and their spouses can set up 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 self-employed earnings, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, 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 your net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $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 offers a structured retirement solution that delivers a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll have in retirement. This strategy is best suited for higher-income entrepreneurs who aim to accumulate a substantial amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary using your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Lubbock, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in Lubbock, TX experienced with retirement plans for the self-employed serves as an invaluable resource for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and design a tailored strategy that matches your objectives. Your advisor in Lubbock, TX will evaluate your financial situation, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Lubbock, TX: Correct Capital's Process
Entrepreneurs in Lubbock, TX who don’t have the time or expertise to manage their retirement savings strategy on their own may end up overwhelmed as they look at their available plans. Through our team at Correct Capital, our Lubbock, TX financial advisors manage the lion's share of your savings plan setup for you, to help make meeting your retirement goals as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in just four 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 a good fit for you and your business. This short conversation lets us understand what you're looking for with no obligation or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your current financial situation, and your long-term savings targets. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll sit down with you and go over your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. Throughout our relationship, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Lubbock, TX financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Lubbock, TX include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Lubbock, TX
Your business isn't "just a business" to you, and your Lubbock, TX financial advisors should provide more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. To every client in Lubbock, TX, we provide 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.
