Self-employed retirement plans Milwaukee, WI. The flexibility of being your own boss in Milwaukee, WI is one of the greatest advantages of having a self-directed career. However, this freedom often comes with potential drawbacks, notably when it comes to planning for retirement, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to having a more secure retirement, seeking advice from a financial advisor in Milwaukee, WI to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Milwaukee, WI investment consulting and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and we have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations go far beyond simple financial figures, and we are dedicated to create tailored solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Milwaukee, WI, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Milwaukee, WI today.
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Why Milwaukee, WI Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver immediate benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Milwaukee, WI allows you to customize your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the flexibility 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 financial situation.
- Roth Options: Choosing 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—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: In some states, you might access state-specific tax breaks as a business owner. These local incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives serves to reduce risk while still growing your savings.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net prevents you from using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Milwaukee, WI Business
Retirement planning enables you to prepare for what’s next with your Milwaukee, WI business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These accounts offer the steady income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $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: Strategically planning your contributions minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts provide a stable foundation during the change. You might want to partner with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the best-fit retirement strategy, you manage your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Milwaukee, WI Now?
There’s no denying that time is one of the most valuable assets for building your retirement fund. Getting a head start not only lets you accumulate a more substantial retirement fund but also lowers the stress of catching up later in life. The following are reasons 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 reach retirement age. The biggest reason is compound interest—the concept where your investments grow, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the effect of this growth.
Example: Two individuals, Alex and Taylor are both self-employed individuals. They each aim 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 saves $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create substantial growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example 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. The scenarios provided are meant to provide general guidance and are not a promise of future results. Outcomes may change due to factors such as market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Milwaukee, WI, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, initiating a plan now enables you to:
- Take advantage of growth that is tax-deferred or penalty-free withdrawals down the road.
- Benefit from flexible contributions that change with your income.
- Establish a long-term safety measure that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll need to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the ability to concentrate on your objectives—both for your golden years and your Milwaukee, WI business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Milwaukee, WI, each providing its own advantages and considerations. A financial advisor is available to help you understand the advantages and disadvantages of each plan and determine the one best suited for your needs. In most cases, your self-employed retirement plan options in Milwaukee, WI include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include specific tax advantages. In a standard 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 using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set 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 is a retirement plan that allows entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute more than the 25% you (the employer) have designated. 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 works well for entrepreneurs facing periods of inconsistent earnings. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including 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
As a self-employed person, 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 companies that have no employees or where the only employee is a spouse. These plans are similar to employer-sponsored 401(k) plans, and let you make 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 restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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 have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as net profit minus 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: Defined benefit plans is a retirement option that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine exactly how much they'll have in retirement. This option is recommended for higher-income professionals who want to save a substantial amount for retirement and are prepared to contribute sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs 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 those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Businesses showing consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions must be determined by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Milwaukee, WI for Your Self-Employed Retirement Plan
Working with a financial advisor in Milwaukee, WI specialized in self-employed retirement plans can be an important asset for those working for themselves. They offer the knowledge to assist navigate the complexities of retirement planning and craft a tailored strategy that matches your objectives. Your advisor in Milwaukee, WI will evaluate your financial situation, 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 features:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Offer continued financial education and guidance throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Milwaukee, WI: Correct Capital's Process
Self-employed individuals in Milwaukee, WI who lack the time, interest, or knowledge to manage their own retirement planning on their own may end up overwhelmed when faced with their options. With Correct Capital, our Milwaukee, WI financial advisors take on the lion's share of your retirement planning for you, to help make meeting your retirement goals as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if we're a good fit for you and your business. This brief introduction helps us learn about your needs with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your existing financial picture, and your retirement goals. This allows us to put together a personalized strategy designed just for you.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll schedule a meeting and go over your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll have regular meetings and review your strategy to keep it tailored to your evolving circumstances.
Our Milwaukee, WI financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Milwaukee, WI include:
- 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 Milwaukee, WI
To you, your business is more than "just a business", and your Milwaukee, WI financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. To every client in Milwaukee, WI, 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, call Correct Capital today at 877-930-401k or contact us online.
