5 Retirement Savings Mistakes to Avoid If You’re Self-Employed
This article is part of our ongoing series about retirement savings for self-employed individuals. Visit our Learn page to read more articles on this topic and follow us on LinkedIn to never miss a new post.
If you’re a freelancer, contractor, or running your own small business, planning for retirement may be a daunting task. However, opening a retirement account can help you invest in your future while you work for yourself.
Whether you’re still in the research phase or have been saving for decades, avoiding these mistakes can help you stay on track.
Not researching your options
Every business (and business owner!) has unique needs. And different types of retirement accounts are better suited to those needs. Understanding all of your retirement account options can help you select an account that accommodates the amount you want to contribute, tax needs, and unique business setup.
Limiting yourself to an IRA
An individual retirement account (IRA) is a popular retirement savings option for self-employed individuals, especially those who are earlier in their careers. However, these accounts have lower contribution limits. So, you might be limiting your retirement savings potential by not considering an account with a higher contribution limit, like a Solo 401(k).
Skipping employer contributions
Some retirement accounts allow self-employed individuals to contribute as both the employee and the employer. For example, in a Solo 401(k), you can make employer contributions of up to 25% of your total compensation. Overlooking these account and contribution options may mean missing out on additional savings.
Taking a fully-DIY approach
Being your own boss means wearing many hats. However, financial professional may not be one of them. Taking on your retirement planning as a do-it-yourself project may mean overlooking potential savings opportunities. A financial advisor can help you choose the right account, plan your investments, and keep your retirement goals on track.
Waiting to start saving
Remember, it’s never too early or too late to start saving for retirement. New solopreneurs and seasoned business owners alike can open a retirement account today. Reach out to our team to learn more about ePlan Services and our retirement plans.
