Self-employed retirement plans Salem, OR. The independence of owning your own business in Salem, OR offers many benefits of having a self-directed career. That said, this flexibility can come with certain challenges, notably regarding planning for retirement, since you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off looking into other possibilities. In addition to having a more comfortable retirement, working with a financial advisor in Salem, OR to establish your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Salem, OR wealth management and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. The father of our founder 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 business and retirement aspirations extend well past basic numbers, and we are dedicated to provide personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Salem, OR, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Salem, OR today.
Why Salem, OR Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer immediate benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Salem, OR helps you create 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) gives you the freedom to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when revenues are down, so that your plan aligns with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to 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: Depending on where you live, you might access additional tax breaks as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives serves to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Salem, OR Business
Preparing for retirement enables you to plan ahead for what’s next with your Salem, OR business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans 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, contributions to retirement accounts are capped at annual limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure financial security during the change. You may also work with a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Salem, OR Now?
There’s no denying that time is one of the most valuable resources for building your retirement fund. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the amount you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the more significant the benefit of compounding.
Example: Taylor and Alex are both self-employed professionals. 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 puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in substantial growth. Consider this example showing the effect of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $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 reach your retirement goals.
*The figures provided in this example are estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and do not guarantee future performance. Your individual results may differ based on elements like market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Salem, OR, it can be tempting to focus more on reinvesting in your business over saving for retirement. Even so, beginning a plan now enables you to:
- Take advantage of tax-free future growth or tax-free withdrawals later on.
- Enjoy flexible contributions that adapt to your income.
- Establish a long-term safety measure that ensures stability, no matter how your business evolves.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means managing your financial future and creating for yourself the freedom to turn your attention to your goals—both for your future retirement and your Salem, OR business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Salem, OR, each with its own benefits and trade-offs. A financial advisor is available to help you understand the benefits and drawbacks of each option and determine the one best suited for your circumstances. Typically, your self-employed retirement plan options in Salem, OR include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer key tax perks. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties provided 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 open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that permits entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above 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 set monetary value 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 don’t have costly startup or administrative fees.
SEPs operate like standard IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can establish 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which have 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: As a self-employed individual 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-employed earnings, 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) 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.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a pre-established payout to business owners upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll have in retirement. This plan is recommended for wealthier professionals who aim to accumulate a significant sum for retirement and are prepared to contribute substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly recommended for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Business owners or partners 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 that have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Salem, OR for Your Self-Employed Retirement Plan
A financial advisor in Salem, OR specialized in self-employed retirement plans can be an important asset for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and develop a tailored strategy that aligns with your goals. A financial advisor in Salem, OR will assess where you stand financially, determine how much risk you’re comfortable with, and guide 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 aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Salem, OR: Correct Capital's Process
Entrepreneurs in Salem, OR who lack the time, interest, or knowledge to oversee their self-employed retirement plan on their own can become overwhelmed when faced with their available plans. Through our team at Correct Capital, our Salem, OR financial advisors take on the lion's share of your retirement strategy for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, 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 understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your present financial standing, and your future objectives. This enables us to craft a custom plan designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed 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 make sure it remains aligned with your goals.
Our Salem, OR financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Salem, OR include:
- 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
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Salem, OR
You don't see your business as "just a business", and your Salem, OR financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver tailored self-employed retirement plans. All our clients in Salem, OR benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
