No Boss? No Problem!

Top Retirement Options for Self-Employed Entrepreneurs & Freelancers

For self-employed professionals and small business owners, planning for retirement can feel overwhelming. Without access to employer-sponsored plans like 401(k)s, many entrepreneurs delay saving for the future. However, several retirement savings options offer flexibility, significant tax benefits, and the ability to build a secure financial foundation—all tailored to the needs of self-employed individuals.

One popular option is a SEP IRA, the Simplified Employee Pension Individual Retirement Account. This plan allows self-employed individuals to contribute up to 25% of their net earnings, with a maximum contribution limit of $69,000 in 2024. Contributions are tax-deductible, reducing taxable income, and the funds grow tax-deferred until retirement. SEP IRAs are straightforward and do not require the complex administrative paperwork associated with larger employer plans. They especially appeal to entrepreneurs who experience income variability, allowing flexibility in how much is contributed each year (Internal Revenue Service).

Another powerful tool is the Solo 401(k), designed exclusively for sole proprietors or business owners without employees (other than a spouse). Solo 401(k) plans allow higher contribution limits—up to $23,000 as an employee in 2024, plus an additional employer contribution of up to 25% of net earnings, for a combined limit of $69,000. For individuals aged 50 and older, catch-up contributions of $7,500 are allowed. Solo 401(k)s offer the benefit of both traditional (pre-tax) and Roth (after-tax) contribution options, making them highly customizable depending on your financial strategy (Investopedia).

For small business owners with fewer than 100 employees, a SIMPLE IRA (Savings Incentive Match Plan for Employees) might be the right fit. SIMPLE IRAs require employer contributions—either matching up to 3% of an employee’s compensation or making a flat 2% contribution for all eligible employees. For self-employed individuals, this plan is easy to establish and maintain, though contribution limits are lower than SEP IRAs and Solo 401(k)s (currently $16,000 in 2024, with catch-up contributions available for those over 50). Despite lower limits, SIMPLE IRAs offer valuable tax deductions and are an attractive option for those managing smaller businesses (IRS).

In addition to these specialized retirement plans, self-employed individuals may also take advantage of Traditional IRAs and Roth IRAs. While the contribution limits are lower—$7,000 in 2024 ($8,000 for those over 50)—these accounts provide essential flexibility. Traditional IRAs allow for tax-deductible contributions depending on income levels, while Roth IRAs offer tax-free withdrawals in retirement. Many self-employed individuals use these accounts to supplement their SEP IRA or Solo 401(k) savings.

Ultimately, the best retirement plan depends on your income level, long-term goals, and whether you have employees. Each option has unique advantages, whether it’s maximizing contributions, reducing taxable income, or ensuring flexibility in how much you can contribute year-to-year. What’s crucial is starting early, reviewing your options regularly, and working with a qualified financial advisor to ensure your strategy evolves alongside your business success.

---

Sources
Internal Revenue Service. “Retirement Plans for Self-Employed People.” IRS, http://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people. Accessed 26 Mar. 2025.
Investopedia. “Best Retirement Plans for the Self-Employed.” Investopedia, http://www.investopedia.com/best-retirement-plans-for-the-self-employed-5193332. Accessed 26 Mar. 2025.
NerdWallet. “Retirement Plans for the Self-Employed.” NerdWallet, http://www.nerdwallet.com/article/investing/retirement-plans-self-employed. Accessed 26 Mar. 2025.