Just because you’re self-employed doesn’t mean you shouldn’t be building up a savings for when you retire. But many self-employed Americans aren’t making it a priority to save for their retirement. According to TD Ameritrade, nearly 70 percent of America’s 10 million self-employed workers aren’t saving regularly for retirement, and 28 percent aren’t saving at all. However, there are several savings options available for those who are self-employed. Ready to start saving your way toward retirement? Read on for some great account options to look into.
1. Solo 401(k)
According to Daily Finance, “In a solo 401(k), you can contribute up to $17,500 plus up to 20 percent of your net self-employment income (business income minus half of your self-employment tax), for a maximum contribution of $51,000 for 2013. Your total contributions cannot exceed your self-employment income for the year.”
If you’re 50 or older, you can make catchup contributions to a solo 401(k) of up to $5,500 for a maximum contribution of $56,500. Daily Finance says that most people can set aside more money in a solo 401(k) plan. Check out 401(k) Help Center for a list of plan administrators. Something to keep in mind: Any of your employees who are 21 or older and work more than 1,000 hours per year for you have to be included in the plan.