Self-employed retirement plans Salem, OR. The freedom of being your own boss in Salem, OR is one of the greatest advantages of working for yourself. That said, this independence often comes with certain challenges, particularly when it comes to planning for retirement, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off looking into other possibilities. In addition to achieving a more secure retirement, working with a financial advisor in Salem, OR to create your self-employed retirement plan can provide significant tax advantages that allow you to move your business forward.
Few Salem, OR investment consulting and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and Correct Capital 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 that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Salem, OR, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Salem, OR today.
Why Salem, OR Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Salem, OR enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when revenues are down, so that your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—an advantageous choice if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you might access additional credits as a self-employed individual. These local incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of 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 isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives is a smart way to mitigate financial risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Salem, OR Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Salem, OR business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings ensure the steady income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, retirement plan contributions are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer financial security during the change. You may also work with a financial advisor experienced in both succession and retirement strategies to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Salem, OR Now?
Time remains one of the most valuable resources in retirement planning. Starting early not only allows you to build a larger nest egg but also reduces the pressure of catching up later in life. This is why it is beneficial to start now:
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 primary reason is compound interest—the powerful process where your investments grow, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the effect of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits 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 accumulates $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time may result in substantial growth. Take a look at this scenario showing the impact of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates derived from NerdWallet’s Compound Interest Calculator, based on 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 are not a promise of future results. Outcomes may change due to factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Salem, OR, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. Even so, starting a plan now gives you the chance to:
- Take advantage of tax-deferred growth or withdrawals without taxes in the future.
- Benefit from contribution flexibility that adapt to your cash flow.
- Establish a safety net that offers peace of mind, no matter how your business changes.
The sooner you start, the less you’ll need to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to focus on your objectives—both for your future retirement and your Salem, OR business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Salem, OR, each offering its own benefits and trade-offs. A financial advisor can help you understand the benefits and drawbacks of each option and choose the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Salem, OR include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include distinct tax benefits. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals don’t incur penalties 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 accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that permits self-employed individuals to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA is a good option for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower 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), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or if the only employee is your spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, 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 for individuals aged 50+ (as of 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 guarantees a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand the precise amount they'll receive in retirement. This plan is recommended for high-earning professionals 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 upon retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's typically suggested for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your financial situation, age, and savings targets. Contribution limits change annually.
The Importance of a Financial Advisor in Salem, OR for Your Self-Employed Retirement Plan
Partnering with an advisor in Salem, OR experienced with retirement plans for the self-employed can be an essential partner for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that matches your objectives. Your advisor in Salem, OR will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Salem, OR: Correct Capital's Process
Self-employed individuals in Salem, OR who lack the time, interest, or knowledge to manage their self-employed retirement plan independently may end up overwhelmed when faced with their choices. At Correct Capital, our Salem, OR financial advisors manage the lion's share of your retirement planning for you, to help make meeting your future savings targets as straightforward 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 can help understand if we're suited to your needs for you and your business. This initial call lets us learn about your needs with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your existing financial picture, and your retirement goals. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: When we finalize a plan using the information you provide, we'll meet with you and review your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll meet with you and monitor your plan to keep it tailored to your evolving circumstances.
Our Salem, OR financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Salem, OR include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in Salem, OR
To you, your business is more than "just a business", and your Salem, OR financial advisors should provide more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. We offer all our Salem, OR clients 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, contact Correct Capital now at 877-930-401k or contact us online.
