Self-employed retirement plans San Diego, CA. The independence of being your own boss in San Diego, CA offers many benefits of having a self-directed career. Even so, this freedom often comes with a lack of security, especially regarding 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, although many should consider understanding their retirement options. In addition to having a financially stable retirement, seeking advice from a financial advisor in San Diego, CA to create your self-employed retirement plan can provide significant tax advantages that enable you to move your business forward.
Few San Diego, CA investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital 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 basic numbers, and we strive to offer personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in San Diego, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in San Diego, CA today.
Why San Diego, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver immediate benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in San Diego, CA helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when income is lower, so your plan works with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for extra credits as a business owner. These local incentives help 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 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of asset classes like stocks and bonds is a smart way to minimize exposure to 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 financial hardships and facing tax penalties.
Plan for the Future of Your San Diego, CA Business
Retirement planning enables you to prepare for what’s next with your San Diego, CA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These plans can provide the reliable income you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg offer financial security as you make this shift. You may also work with a financial advisor who specializes in succession planning and retirement accounts to reduce taxes on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in San Diego, CA Now?
Time is one of the most important assets for building your retirement fund. Starting early not only allows you to build a larger nest egg but also minimizes 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 can have a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, earn even more returns. The more time your money has to grow, the larger the effect of this compounding process.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $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 only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in substantial growth. Consider this example showing the effect of compound interest:
- 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: Contributing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario 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. These examples are intended as illustrative examples and do not guarantee future performance. Outcomes may change due to factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in San Diego, CA, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. Even so, beginning a plan now gives you the chance to:
- Leverage tax-deferred growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that align with your earnings.
- Create a financial cushion that ensures stability, no matter how your business changes.
Starting early, the less you’ll need to worry about catching up later in life. Saving for retirement now means taking control of your financial future and giving yourself the freedom to turn your attention to your dreams—both for your retirement years and your San Diego, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in San Diego, CA, each providing its own advantages and considerations. A financial advisor will guide you to understand the benefits and drawbacks of each choice and identify the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in San Diego, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, 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 types of accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are available to anyone with a source of 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 is a retirement plan that permits those who are self-employed to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above 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 may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
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
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as 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 where the only employee is a spouse. This type of plan function similarly to employer-sponsored 401(k) plans, and enable 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 restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses may establish 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:
- Employee contributions 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 individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is defined as net profit minus 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 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll receive in retirement. This plan is best suited for wealthier self-employed individuals who aim to accumulate a large amount for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses 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 cap on contributions is calculated by an actuary determined by your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in San Diego, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in San Diego, CA experienced with retirement plans for the self-employed is an important asset for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that aligns with your goals. A financial advisor in San Diego, CA will evaluate your financial situation, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- 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 San Diego, CA: Correct Capital's Process
Entrepreneurs in San Diego, CA who don’t have the time or expertise to oversee their retirement savings strategy independently can become overwhelmed by their available plans. Through our team at Correct Capital, our San Diego, CA financial advisors take on the bulk of your retirement strategy for you, to help 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 just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if our services align for you and your business. This brief introduction helps us learn about your needs with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including your employee count, your current financial situation, and your long-term savings targets. This helps us create a tailored approach designed just for you.
- 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. Throughout our relationship, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our San Diego, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in San Diego, CA include:
- 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
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in San Diego, CA
You don't see your business as "just a business", and your San Diego, CA financial advisors should provide more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. All our clients in San Diego, CA benefit from our I.O.U. promise: all guidance we provide 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.
