Self-employed retirement plans Salinas, CA. The independence of running your own company in Salinas, CA offers many benefits of having a self-directed career. That said, this flexibility sometimes brings with certain challenges, especially regarding building your retirement fund, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to enjoying a financially stable retirement, working with a financial advisor in Salinas, CA to create your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Salinas, CA investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs 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 our firm have a rich history of supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement go far beyond simple financial figures, and we strive to create customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Salinas, CA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Salinas, CA today.
Why Salinas, CA 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 tangible benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Salinas, CA enables you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and cut back when your earnings dip, ensuring your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to grow.
- State-Specific Incentives: In some states, you might access extra tax breaks as a self-employed individual. These local incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for 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
Planning for a safe 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 reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your Salinas, CA Business
A thoughtful retirement strategy also helps you plan ahead for what’s next with your Salinas, CA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings offer the steady income you’ll need later on. Remember that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution 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: Using retirement contributions wisely helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide a stable foundation as you make this shift. You might want to work 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, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Salinas, CA Now?
Time is one of the most valuable factors for building your retirement fund. Beginning sooner rather than later not only allows you to build a bigger financial cushion but also reduces the pressure of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, then, accumulate even more returns. The more time your money has to grow, the larger the impact of compounding.
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 starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in substantial growth. Here’s a simple scenario showing the power of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving 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.
The earlier you begin, the less you need to save each year to meet your retirement goals.
*The figures provided in this example are estimates generated with 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 intended as illustrative examples and do not guarantee future performance. Outcomes may change depending on variables including market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Salinas, CA, it can be tempting to prioritize reinvesting in your business rather than saving for retirement. Even so, initiating a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals in the future.
- Benefit from adjustable savings that change with your earnings.
- Establish a safety net that provides security, no matter how your business develops.
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 managing your financial future and creating for yourself the freedom to focus on your objectives—both for your golden years and your Salinas, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Salinas, CA, each offering its own pros and cons. A financial advisor will guide you to evaluate the advantages and disadvantages of each choice and identify the one ideal for your circumstances. Typically, your self-employed retirement plan options in Salinas, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that provide specific tax advantages. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but retirement distributions are subject to income tax. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs 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're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that enables those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience cycles of high revenue and low revenue. Unlike other plans, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or if the only employee is your spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. Using a solo 401(k), 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, capped at 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.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $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: The defined benefit plan is a retirement option that delivers a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand what they'll have in retirement. This plan is recommended for wealthier professionals who want to save a substantial amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's generally recommended for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Salinas, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Salinas, CA focused on self-employed retirement strategies can be an invaluable resource for entrepreneurs. They have the expertise to help guide you through the challenges of retirement planning and design a customized plan that matches your objectives. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Salinas, CA: Correct Capital's Process
Entrepreneurs in Salinas, CA who aren’t equipped with the time or understanding to manage their own retirement planning on their own may end up overwhelmed when faced with their choices. Through our team at Correct Capital, our Salinas, CA financial advisors take on the majority of your retirement strategy for you, working to make meeting your financial objectives as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if our services align for you and your business. This short conversation allows us to understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your current financial situation, and your long-term savings targets. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and review your plan step by step to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Salinas, CA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Salinas, CA 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 Salinas, CA
Your business isn't "just a business" to you, and your Salinas, CA financial advisors need to offer more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. To every client in Salinas, CA, we provide our I.O.U. promise: all guidance we provide 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.
