Self-employed retirement plans Santa Clarita, CA. The flexibility of owning your own business in Santa Clarita, CA is one of the best aspects of working for yourself. That said, this independence often comes with a lack of security, especially in terms of planning for retirement, since you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off understanding their retirement options. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Santa Clarita, CA to establish your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Santa Clarita, CA financial advisory and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations go far beyond simple financial figures, and we strive to offer customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Santa Clarita, CA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Santa Clarita, CA today.
Why Santa Clarita, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer immediate benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Santa Clarita, CA allows you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when your earnings dip, ensuring your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for extra credits as a sole proprietor. These regional incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax 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
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 varied asset classes like stocks and bonds is a smart way to reduce risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Santa Clarita, CA Business
Retirement planning also helps you plan ahead for what’s next with your Santa Clarita, CA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans offer the financial stability you’ll need later on. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide the funds you need during the change. You may also work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the best-fit retirement 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 Santa Clarita, CA Now?
There’s no denying that time is one of the most valuable factors in retirement planning. Starting early not only helps you grow a bigger financial cushion but also reduces the stress of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Taylor and Alex are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to significant 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 end up with $497,303.29* by age 65.
- Starting at age 35: Contributing 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.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations represent estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ due to factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Santa Clarita, CA, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. However, starting a plan now allows you to:
- Take advantage of tax-deferred growth or withdrawals without taxes later on.
- Benefit from flexible contributions that change with your earnings.
- Create a safety net that provides security, no matter how your business evolves.
The sooner you start, the less you’ll need to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the freedom to focus on your objectives—both for your retirement years and your Santa Clarita, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Santa Clarita, CA, each with its own pros and cons. A financial advisor will guide you to understand the pros and cons of each option and identify the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Santa Clarita, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include distinct tax benefits. In a conventional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, 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 accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $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 allows those who are self-employed to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) have designated. If you have employees, you are obligated to 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. This type of plan is a good option for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
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
If you’re self-employed, the amount eligible to be contributed 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 companies that have no employees or where the only employee is a spouse. This type of plan operate much like standard 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options often come with more constrained investment avenues. In a solo 401(k) 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 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, capped at the annual contribution limit. For 2025, the limits will be $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) are limited to 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $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 represents a type of retirement plan that delivers a pre-established payout to self-employed individuals upon retirement. In contrast to the plans discussed earlier, 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 strategy is ideal for wealthier professionals who are focused on saving a substantial amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's typically suggested for people above age 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit 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
- Organizations with proven 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 requires calculation from an actuary based on your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Santa Clarita, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Santa Clarita, CA focused on self-employed retirement strategies can be an important asset for entrepreneurs. They have the expertise to help navigate the complexities of retirement planning and develop a customized plan that matches your objectives. A financial advisor in Santa Clarita, CA will review your finances, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to your needs even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Santa Clarita, CA: Correct Capital's Process
Santa Clarita, CA business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan independently often feel overwhelmed as they look at their choices. With Correct Capital, our Santa Clarita, CA financial advisors take on the majority of your savings plan setup for you, and strive to ensure meeting your retirement goals as hassle-free 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: It only takes 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This brief introduction helps us get a sense of your goals with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your current financial situation, 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 based on the information you provide, we'll meet with you and review your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can start saving. Over the course of our partnership, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Santa Clarita, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Santa Clarita, CA 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 Santa Clarita, CA
Your business isn't "just a business" to you, and your Santa Clarita, CA financial advisors must deliver more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Santa Clarita, CA clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
