Self-employed retirement plans Mobile, AL. The freedom of owning your own business in Mobile, AL is one of the greatest advantages of working for yourself. However, this independence often comes with potential drawbacks, particularly when it comes to planning for retirement, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Mobile, AL to create your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few Mobile, AL financial advisory and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as 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 our firm are deeply experienced in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to simple financial figures, and we work tirelessly to provide tailored solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Mobile, AL, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Mobile, AL today.
Why Mobile, AL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide real benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Mobile, AL helps you design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and reduce savings when revenues are down, so that your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP 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 might access state-specific credits as a sole proprietor. These local incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax 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 determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets can help reduce risk while continuing to build your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t using your retirement funds during challenging periods and facing tax penalties.
Plan for the Future of Your Mobile, AL Business
A thoughtful retirement strategy also helps you plan ahead for what’s next with your Mobile, AL business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and are not part of the sale. These savings can provide the steady income you’ll need during retirement. Remember that while selling your business results in a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $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 sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure the funds you need through the transition. You can also work with a financial advisor experienced in both succession and retirement strategies to help with taxes during the sale.
With the best-fit retirement strategy, you can take control of your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Mobile, AL Now?
Time is one of the most valuable assets in retirement planning. Starting early not only allows you to build a larger nest egg but also minimizes the financial burden of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the total you’ll have when you retire. The main reason is compound interest—the financial principle where your investments generate earnings, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the benefit of this compounding process.
Example: Taylor and Alex are both self-employed professionals. 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 bridge the gap.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Take a look at this scenario showing the effect of consistent growth:
- Starting at age 25: Putting aside $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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are estimates calculated using 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 intended as illustrative examples and are not a promise of future results. Actual results may vary depending on variables including market conditions, fees, and personal factors. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Mobile, AL, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. That said, initiating a plan now enables you to:
- Benefit from tax-free future growth or withdrawals without taxes in the future.
- Enjoy contribution flexibility that change with your earnings.
- Establish a safety net that offers peace of mind, no matter how your business develops.
Starting early, 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 giving yourself the opportunity to concentrate on your goals—both for your retirement years and your Mobile, AL business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for entrepreneurs in Mobile, AL, each with its own pros and cons. A financial advisor will guide you to understand the advantages and disadvantages of each option and choose the one ideal for your needs. Typically, your self-employed retirement plan options in Mobile, AL include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide distinct tax benefits. In a standard IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions are made with after-tax income, but qualified withdrawals in 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, IRAs, including traditional and Roth options 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 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables self-employed individuals to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses without employees or if the only employee is your spouse. This type of plan 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 allows for more savings than SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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 self-employment income, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to self-employed individuals 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 get in retirement. This option is recommended for wealthier self-employed individuals who are focused on saving a large amount for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's generally recommended for people above age 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Partners or owners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% with plans to contribute more
- Companies showing 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 is calculated by an actuary determined by your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Mobile, AL for Your Self-Employed Retirement Plan
Working with a financial advisor in Mobile, AL experienced with retirement plans for the self-employed can be an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and design a customized plan that matches your objectives. Your advisor in Mobile, AL will assess where you stand financially, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. A key part of what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- 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 Mobile, AL: Correct Capital's Process
Mobile, AL business owners who lack the time, interest, or knowledge to oversee their own retirement planning on their own often feel overwhelmed as they look at their options. At Correct Capital, our Mobile, AL financial advisors manage the majority of your retirement strategy for you, working to make meeting your future savings targets as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're suited to your needs for you and your business. This initial call allows us to get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including how many employees you have (if any), your present financial standing, and your retirement goals. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and go over your plan thoroughly to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can begin contributing. Over the course of our partnership, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Mobile, AL financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Mobile, AL 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 Mobile, AL
Your business isn't "just a business" to you, and your Mobile, AL financial advisors must deliver more than simply sound financial advice. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to create tailored self-employed retirement plans. To every client in Mobile, AL, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
