Planning for retirement can be complicated. Thankfully, many people are offered retirement plans from their employer, presenting them with options that can help them get started. If you are self-employed, however, you may find yourself researching strategies without that resource.
There are many types of retirement plans that are available for self-employed people. As you weigh your options, you may find it helpful to discuss them with a professional. Harvest Wealth Partners’ financial advisors offer services for individuals planning for retirement, whether you are choosing a plan for the first time, looking to refine your strategy after a change in employment, or just seeking another opinion as you prepare for your financial future.
The first step for planning for retirement is to think about your goals. When would you like to retire, and how much money will you realistically need to do so? Common advice for the latter question is to replace between 70 and 90 percent of the money you were making before you retired. When you think about replacing that money for each year you continue to live, it can become a considerable sum.
Once you’ve outlined your goals, you can begin thinking about the strategies that you will use to work towards them. Social Security may cover some of the money that you will need in retirement. However, according to the Social Security Administration, it only covers 40% of the average person’s pre-retirement income, and the benefit that you receive for Social Security will also depend on the age at which you retire. One way that you might make up the difference to reach your goals is through a retirement plan.
If you are self-employed, there are a handful of key retirement plans that are available to you. The Internal Revenue Service (IRS) outlines a few:
When choosing a plan, you will want to weigh factors like contribution limits and tax advantages that are offered by the option in question. For example, contributions to a solo 401(k) are not taxed when you invest them, but the distributions are taxed after you retire. If it seems likely that you will pay less overall by paying taxes now, then you may choose to look for a different plan, like a Roth IRA. When working with a financial advisor, you can discuss these tax advantages within the scope of your overall goals in order to reach a plan that aims at preparing you for the time that you are ready to quit working full time.
If you are self-employed, you can still use many of the same retirement plans that are available to people working for a company. When choosing a plan, you may find it helpful to consult a professional who has knowledge on how these strategies work and the tax implications that might follow from them. At Harvest Wealth Partners, we offer a range of services that are geared towards helping individuals plan for tomorrow. Contact us today to schedule a consultation with a member of our team.
Harvest Wealth Partners is committed to helping our clients work towards a successful future. We believe in your potential to understand the financial options that can lead you to your goals. Call us today to partner with our team. We look forward to continuing our mission for years to come.
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