Self-employed retirement plans San Diego, CA. The flexibility of being your own boss in San Diego, CA offers many benefits of having a self-directed career. That said, this independence often comes with a lack of security, particularly regarding building your retirement fund, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider looking into other possibilities. In addition to enjoying a more secure retirement, seeking advice from a financial advisor in San Diego, CA to establish your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few San Diego, CA investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (check out our story here), and our firm take pride in assisting business owners in their retirement planning needs. We recognize 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. Read on to discover about your self-employed retirement plan options in San Diego, CA, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in San Diego, CA today.
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Why San Diego, 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 deliver real benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in San Diego, CA allows you to customize your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to modify how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, so that your plan works with your financial situation.
- Roth Options: Choosing 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 anticipate 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 Solo 401(k) lower your taxable income, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you may be eligible for additional credits as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets can help reduce risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund prevents you from tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your San Diego, CA Business
Preparing for retirement also helps you prepare for what’s next with your San Diego, CA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These accounts ensure the reliable income you’ll need in the future. Remember that while selling your business results in a capital gain, retirement plan contributions are capped at annual limits (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg provide the funds you need as you make this shift. You can also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the right retirement plan, you manage 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 San Diego, CA Now?
Time is one of the most important factors in retirement planning. Getting a head start not only allows you to build a more substantial retirement fund but also minimizes the pressure of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a substantial 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, then, generate even more returns. The longer your money has to grow, the more significant the effect of this growth.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time may result in impressive growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary depending on factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in San Diego, CA, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. That said, starting a plan now enables you to:
- Take advantage of tax-free future growth or tax-free withdrawals down the road.
- Enjoy flexible contributions that align with your earnings.
- Establish a long-term safety measure that provides security, no matter how your business changes.
Starting early, the less you’ll have to worry about catching up later in life. Building your retirement savings today means managing your financial future and allowing yourself the ability 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 designed for entrepreneurs in San Diego, CA, each with its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and determine the one most suitable for your needs. Typically, your self-employed retirement plan options in San Diego, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that allows those who are self-employed to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA is a good option for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals 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: A Solo 401(k) plan, also called 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. These plans function similarly to standard 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the additional opportunities 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: 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:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a pre-established payout to self-employed individuals upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll get in retirement. This option is best suited for higher-income entrepreneurs who want to save a significant sum for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or with a small staff of under five may establish an individual defined benefit plan, but it's typically advised for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary using your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in San Diego, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in San Diego, CA specialized in self-employed retirement plans is an important asset for self-employed individuals. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a customized plan that aligns with your goals. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and assist 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 aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- 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
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
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 manage their own retirement planning on their own often feel overwhelmed when faced with their choices. With Correct Capital, our San Diego, CA financial advisors take on the lion's share of your retirement planning for you, working to make meeting your future savings targets 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: 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 lets us get a sense of your goals 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 present financial standing, and your long-term savings targets. This allows us to put together a custom plan designed just for you.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and review your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. Over the course of our partnership, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our San Diego, CA financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in San Diego, CA include:
- 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 San Diego, CA
Your business isn't "just a business" to you, and your San Diego, CA financial advisors should provide more than simply sound financial advice. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. All our clients in San Diego, CA benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
