Even self employed professionals have to think about retirement, and begin planning for the future. When getting through today seems difficult, it’s even harder to turn attention to the days ahead. Explore options for retirement plans that are affordable and easy to keep, because no matter what the future is out there waiting to begin.
Self Employment-Friendly Retirement Plans
With no employer to contribute or set up an easy-to-maintain retirement plan, self employed professionals might feel a little left out in the cold. There are, however, several options for retirement plans that can work well with self employment (and the budget that goes with it).
- SEPs: Simplified employee pensions, SEPs, allow workers to save up to $49,000 in a single retirement account. Self employed professionals can contribute up to 20% of their annual income- or nothing at all- with a variable percentage rate. With this retirement plan, professionals can contribute only what they can afford.
- Keogh plans: The name may be a little strange, but Keogh plans are easy for self employed professionals to work with. This is a type of profit-sharing plan that’s also based upon a percentage of income, again allowing professionals to save up to $49,000 toward their retirement. Note that the United States IRS requires annual reports on Keogh plan activity.
- Solo 401(k)s: 401(k) plans are incredibly popular, and used quite frequently in the workforce. Self employed professionals can get one of these as a solo retirement plan that doesn’t require any employer input.
- IRAs: Roth IRAs and Spousal Deductible IRAs are also options for self employed professionals seeking retirement plans. Different tax percentages apply to these types of plans depending upon the year they’re started, so it’s best to go over these plans with a financial advisor or related expert.
Self employed professionals have more retirement options than they may realize. There are several different retirement plans that work well with self employment, but aside from this there is no limit to the amount of available investment accounts. From savings accounts to stocks and bonds, there are many different ways to save money toward an otherwise uncertain future.
Even without a traditional employer, professionals can plan for their future retirement in several different ways. Don’t neglect this planning! Even young, healthy self employed workers are going to want to retire from the job some time. Only by planning ahead for retirement can this eventually happen.
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