Being self-employed comes with incredible benefits — freedom, flexibility, and control over your financial future. But when it comes to retirement planning, the responsibility falls entirely on you. Unlike traditional employees with 401(k)s and pensions, self-employed individuals must create their own savings strategy.

If you’re an entrepreneur, freelancer, or small business owner, you may already have a plan in place. But is it still the best fit for your long-term goals? This guide explores the most effective retirement options for self-employed individuals, their tax advantages, and key considerations to help you maximize your savings.

Choosing the Right Plan for Your Business & Goals

Even if you already contribute to a plan, it’s wise to periodically reassess your options as your income, business structure, or financial goals evolve. Here is an overview of the top choices for self-employed individuals:

1. Solo 401(k): Best for High Earners with No Employees

A Solo 401(k), or an Individual 401(k), is a retirement plan designed specifically for self-employed individuals with no employees other than a spouse.

Key Benefits:

  • Contribution limits for 2025 are up to $70,000 (or $77,500 if 50 or older).
  • Contributions are tax-deductible, reducing taxable income.
  • Option to make Roth 401(k) contributions for tax-free withdrawals in retirement.
  • Ability to take a loan from the plan if needed.

Key Considerations:

  • Must switch plans if you hire non-spouse employees.
  • IRS Form 5500 required if assets exceed $250,000.

Best for: Self-employed individuals looking for a flexible, high-limit retirement plan with the added option of Roth contributions and loan access.

2. SEP IRA: Simple & Scalable for Business Owners

A Simplified Employee Pension (SEP) IRA is a tax-advantaged retirement plan that allows employers to make contributions to traditional IRAs set up for themselves and their employees.

Key Benefits:

  • Contributions up to 25% of net self-employment earnings, capped at $70,000 for 2025.
  • Contributions are tax-deductible and vest immediately.
  • Flexible annual contributions (can vary or skip in slow years).

Key Considerations:

  • If you have employees, you must contribute the same percentage for all (including yourself).
  • Employees can’t contribute — only employers.

Best for: Sole proprietors seeking a high-limit, low-maintenance retirement plan, with the option to include employees if the business grows.

3. SIMPLE IRA: A Low-Cost Option for Small Businesses

A Savings Incentive Match Plan for Employees (SIMPLE) IRA is a retirement plan designed for small businesses with 100 or fewer employees that allows both employer contributions and employee salary deferrals.

Key Benefits:

  • Personal contributions are tax-deductible.
  • Employer contributions (3% match or 2% flat) are tax-deductible as a business expense.
  • Employees can contribute to their own plans.
  • Less admin than a traditional 401(k).

Key Considerations:

  • Annual employer contributions are mandatory.
  • The same employer contribution method must be used for yourself and any employees.
  • Lower contribution limits than a Solo 401(k) or SEP IRA.

Best for: Self-employed individuals who want a simple, lower-cost way to contribute to their own retirement while offering employee benefits.

4. Defined Benefit Plan: Best for High-Income Self-Employed Individuals

A Defined Benefit Plan is a pension-style retirement plan where contribution amounts are based on a formula intended to provide a fixed income in retirement.

Key Benefits:

  • Higher contribution potential than most other plans ($280,000 for 2025).
  • Predictable, pension-like retirement income.
  • Contributions are tax-deductible.

Key Considerations:

  • Requires actuarial calculations and consistent annual funding.
  • More administrative upkeep than other plans.

Best for: High-income, self-employed individuals who want to make large contributions and follow a structured long-term plan.

5. Traditional or Roth IRA: A Supplement to Other Plans

Even if you contribute to a Solo 401(k), SEP IRA, or SIMPLE IRA, a Traditional or Roth IRA can be an additional savings tool.

Key Benefits:

  • 2025 contribution limit: $7,000 ($8,000 if 50+).
  • Roth IRAs offer tax-free withdrawals.
  • Traditional IRAs provide tax-deferred growth.
  • Easy to set up with no employer duties.

Key Considerations:

  • Lower annual contribution limits than other plans.
  • Income restrictions apply for Roth contributions and Traditional IRA deductibility.

Best for: Self-employed individuals who want to supplement other plans with additional tax-advantaged savings.

6. Health Savings Accounts (HSAs): A Triple-Tax-Advantaged Strategy

While not a traditional retirement account, a Health Savings Account (HSA) can play a powerful role in your long-term retirement savings strategy.

Key Benefits:

  • Tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.
  • Funds roll over annually and stay with you, even into retirement.
  • Investable once a minimum balance is met, offering long-term growth potential.

Key Considerations:

  • Only available if enrolled in a high-deductible health plan (HDHP).
  • Non-medical withdrawals before 65 are taxed and penalized.

Best for: Self-employed individuals with HDHPs who want to save tax-efficiently for healthcare costs in retirement.

Investing Beyond Retirement

There are other ways to grow your wealth outside of retirement accounts. For many self-employed individuals, diversifying beyond retirement plans can enhance flexibility, liquidity, and long-term financial security.

Brokerage Accounts: A taxable investment account offers flexibility. While you’ll pay capital gains tax, you can store a variety of investments without contribution limits or early withdrawal penalties.

Business Investments: If done wisely, reinvesting in your own business or other entrepreneurial ventures can generate returns that far outpace traditional markets.

Tax Strategy Still Matters: Just because an account isn’t “tax-advantaged” doesn’t mean you can’t utilize other tax-efficient strategies such as capital gains harvesting, tax-loss harvesting, and asset location strategies.

The Bottom Line: Make Sure Your Plan is Working for You

Your retirement success depends on today’s choices. Start early, optimize your strategy, and align your savings with long-term goals. Need help choosing the right plan? Our advisors can help you build a tax-smart, personalized retirement roadmap.

Schedule a consultation today, and let’s create a comprehensive financial plan for a secure and prosperous retirement.