Self-employed retirement plans San Francisco, CA. The independence of owning your own business in San Francisco, CA is one of the greatest advantages of working for yourself. However, this independence can come with certain challenges, especially in terms of building your retirement fund, since you don't have access to 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 Francisco, CA to establish your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few San Francisco, CA investment consulting and retirement planning firms understand the needs of entrepreneurs better than Correct Capital. The father of our founder was a small business owner himself (check out our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we work tirelessly to provide personalized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in San Francisco, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in San Francisco, CA today.
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Why San Francisco, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in San Francisco, CA allows you to create your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when your earnings dip, so your plan works with your current income.
- Roth Options: Choosing 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 to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for state-specific credits as a self-employed individual. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and other assets serves to mitigate financial risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your San Francisco, CA Business
A thoughtful retirement strategy can assist you prepare for what’s next with your San Francisco, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and are not part of the sale. These accounts offer the reliable income you’ll need in the future. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $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: Strategically planning your contributions minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure financial security through the transition. You may also work with a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in San Francisco, CA Now?
Time is one of the most valuable assets in retirement planning. Getting a head start not only lets you accumulate a more substantial retirement fund but also lowers the pressure 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 can have a major impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments grow, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the greater the effect of compounding.
Example: Taylor and Alex are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to 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 accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create significant growth. Here’s a simple scenario showing the power of compounding:
- Starting at age 25: Putting aside $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: Saving 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 less effort required each year to achieve your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ based on variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in San Francisco, CA, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. Even so, starting a plan now enables you to:
- Leverage growth that is tax-deferred or withdrawals without taxes in the future.
- Benefit from flexible contributions that align with your earnings.
- Establish a long-term safety measure that offers peace of mind, no matter how your business changes.
Starting early, the less you’ll have to worry about playing catch-up later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the ability to focus on your objectives—both for your golden years and your San Francisco, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for entrepreneurs in San Francisco, CA, each with its own advantages and considerations. A financial advisor will guide you to learn about the pros and cons of each option and determine the one most suitable for your unique situation. Typically, your self-employed retirement plan options in San Francisco, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are available to anyone with an earned 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 enables those who are self-employed to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. 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. This type of plan may be ideal for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can open 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 contribution you can make 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 self-employed retirement plan intended for companies that have no employees or if the only employee is your spouse. These plans operate much like standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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 earned income from self-employment, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that provides a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll get in retirement. This strategy is recommended for higher-income professionals who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally recommended for people above age 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in San Francisco, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in San Francisco, CA experienced with retirement plans for the self-employed can be an invaluable resource for self-employed individuals. They have the expertise to help guide you through the challenges of retirement planning and design a customized plan that matches your objectives. A financial advisor in San Francisco, CA will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- 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 San Francisco, CA: Correct Capital's Process
Entrepreneurs in San Francisco, CA who aren’t equipped with the time or understanding to oversee their own retirement planning independently often feel overwhelmed by their options. Through our team at Correct Capital, our San Francisco, CA financial advisors take on the lion's share of your savings plan setup for you, working to make meeting your future savings targets as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 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 helps us 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 request information, including whether you have employees, your current financial situation, and your future objectives. This allows us to put together a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and review your plan step by step to ensure you understand 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 initiate your savings journey. As time goes on, we'll check in and track your progress to make sure it remains aligned with your goals.
Our San Francisco, CA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in San Francisco, CA include:
- Independent Financial Advisor
- Roth Conversion
- 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 San Francisco, CA
Your business isn't "just a business" to you, and your San Francisco, CA financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. To every client in San Francisco, CA, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
