25 October 2025
Retirement planning can feel like a daunting task, especially when you're self-employed. Unlike traditional employees who may get a cushy 401(k) or pension plan from their employer, you're left to navigate the often confusing world of savings and investments all on your own. But, fear not! Just because you don’t have an employer-sponsored retirement plan doesn’t mean you’re out of options. In fact, being self-employed gives you more flexibility and control over your retirement savings, and that’s something worth celebrating.In this guide, we’ll dive deep into some of the best retirement plans available to self-employed individuals. Whether you're a freelancer, gig worker, small business owner, or side-hustler, there’s a retirement plan that can fit your needs. Let’s get started!
Why Should Self-Employed Individuals Care About Retirement Planning?
Before jumping into specific plans, let’s quickly talk about why retirement planning matters—especially for self-employed people.
When you’re self-employed, you don’t have the safety net of employer-sponsored benefits. No automatic paycheck deductions for a 401(k), no company match, no pensions. It’s all on you, which can be both freeing and overwhelming. However, the good news is that by taking control of your retirement, you can tailor your plan to fit your income, expenses, and future goals.
Here’s the thing—retirement will sneak up on you faster than you think. If you don't plan now, you're setting yourself up for a potentially stressful financial future. The sooner you start, the more time your money has to grow, thanks to the magic of compound interest. Even if your income fluctuates, contributing what you can, when you can, will pay off in the long run.
The Best Retirement Plans for Self-Employed Individuals
1. SEP IRA (Simplified Employee Pension IRA)
The SEP IRA is often a go-to retirement plan for self-employed individuals, and for good reason. It’s easy to set up, has flexible contributions, and offers some serious tax advantages.
Key Benefits:
- High Contribution Limits: You can contribute up to 25% of your net self-employment earnings, with a maximum cap of $66,000 in 2023. That’s significantly higher than the contribution limit for traditional or Roth IRAs.- Tax Deductible: Contributions to a SEP IRA are tax-deductible, which means you reduce your taxable income for the year you contribute. More money in your pocket now, and a bigger retirement fund later—win-win!
- No Annual Contributions Required: Unlike a 401(k), where you might feel obligated to contribute regularly, the SEP IRA allows you to contribute when it makes sense for your financial situation. If you have a lean year, you can dial back contributions. If you have a bumper year, go ahead and max it out!
Who It’s Best For:
The SEP IRA is ideal for self-employed individuals who want a plan that’s easy to manage and offers high contribution limits. It’s particularly great for those who have fluctuating incomes.2. Solo 401(k) (Also Known as an Individual 401(k))
The Solo 401(k) is like the SEP IRA’s more generous cousin, offering higher contribution limits and more flexibility. If you’re a self-employed individual with no employees (other than a spouse), this is a stellar option.
Key Benefits:
- Dual Contributions: You get to contribute as both the employer and the employee. As the employee, you can defer up to $22,500 (in 2023), or $30,000 if you're 50 or older. As the employer, you can contribute up to 25% of your net self-employment earnings. Combined, the total cap is $66,000 for 2023.- Catch-Up Contributions: If you’re over 50, you can contribute an additional $7,500, bringing your total possible savings to a whopping $73,500.
- Roth Option: Some Solo 401(k) plans offer a Roth option, allowing you to contribute after-tax dollars now and withdraw tax-free in retirement. If you expect to be in a higher tax bracket later, this can be a savvy choice.
- Loan Feature: Unlike the SEP IRA, a Solo 401(k) allows you to borrow from your account, which can be a lifesaver in a financial pinch.
Who It’s Best For:
The Solo 401(k) is perfect for high-earning self-employed individuals who want to maximize their contributions. It’s also great if you like the idea of having both traditional and Roth options for tax diversification.3. SIMPLE IRA (Savings Incentive Match Plan for Employees)
Another popular option is the SIMPLE IRA. While it’s technically designed for small businesses with employees, it’s also a fantastic option for self-employed individuals or small business owners with a few employees.
Key Benefits:
- Low Administrative Burden: As its name suggests, the SIMPLE IRA is relatively simple to set up and manage. There’s minimal paperwork, and it’s less complex than a 401(k).- Employer Match: You can contribute as both the employer and employee, similar to the Solo 401(k). You’re required to either match employee contributions (up to 3% of their earnings) or contribute 2% of their earnings, even if they don't contribute. If you’re self-employed, this just means contributing to your own account.
- Employee Contribution Limits: As an employee, you can contribute up to $15,500 in 2023, or $19,000 if you’re over 50. This is lower than the Solo 401(k), but still significant.
Who It’s Best For:
The SIMPLE IRA is ideal for self-employed individuals who may have a small team or plan to hire employees in the future. It’s also a good option if you want a straightforward plan without a lot of administrative hassle.4. Traditional and Roth IRAs
If you’re just starting out or want something simple to complement another retirement plan, traditional and Roth IRAs are solid choices. While the contribution limits are lower than the SEP IRA or Solo 401(k), they still offer great tax advantages and flexibility.
Key Benefits:
- Lower Contribution Limits: In 2023, the contribution limit for both traditional and Roth IRAs is $6,500, or $7,500 if you’re 50 or older. While this might not seem like much, it’s still a great way to save for retirement, especially if you’re using it in conjunction with another plan.- Tax Benefits: With a traditional IRA, your contributions are tax-deductible, helping you lower your taxable income now. With a Roth IRA, you contribute after-tax dollars, but your withdrawals in retirement are tax-free. The Roth IRA is especially beneficial if you expect to be in a higher tax bracket when you retire.
- Investment Flexibility: IRAs typically offer a wide range of investment options, from stocks to bonds to ETFs. This allows you to diversify your portfolio and grow your retirement savings over time.
Who It’s Best For:
Traditional and Roth IRAs are ideal for those who are just starting their retirement savings journey or who want to diversify their tax strategy. If you’re already contributing to a SEP IRA or Solo 401(k), adding an IRA can provide even more tax benefits.5. Defined Benefit Plan (Pension Plan)
If you’re a high-income earner and want to save aggressively for retirement, a defined benefit plan could be the golden goose you’re looking for. This plan, also known as a pension plan, allows you to set aside substantial sums for retirement based on your projected retirement income.
Key Benefits:
- Huge Contribution Potential: Depending on your age and income, you could potentially contribute hundreds of thousands of dollars annually. The exact amount is calculated based on a formula that takes into account your age, income, and desired retirement benefits.- Guaranteed Income: Unlike other retirement plans where your balance fluctuates with the market, a defined benefit plan promises a fixed, guaranteed income in retirement.
- Tax Deferral: Like other retirement plans, contributions are tax-deductible, helping you reduce your taxable income.
Who It’s Best For:
The defined benefit plan is best for self-employed individuals with consistently high incomes who want to maximize their retirement savings. It’s also great for those who value the certainty of a guaranteed income in retirement.What’s the Best Plan for You?
Now that we’ve covered the best retirement plans for self-employed individuals, you might be wondering: Which one should I choose?
The answer depends on your income, goals, and how much complexity you’re willing to deal with. If you’re just starting out or have a lower income, a Roth IRA or traditional IRA is a great place to begin. If you’re looking to save a significant amount, a Solo 401(k) or SEP IRA will give you the flexibility and higher contribution limits you need. Finally, if you’re a high-earner with big retirement goals, a defined benefit plan might be the best fit.
Remember, you don’t have to choose just one. Many self-employed individuals use a combination of retirement plans to maximize their tax advantages and savings potential.
Final Thoughts
Being self-employed means you’re in charge of your financial future, and that includes retirement. While it might feel overwhelming at first, there are plenty of retirement plans designed specifically for people like you. Whether you’re looking for something simple or a plan that allows for high contributions, there’s a retirement strategy that will help you achieve your goals.
The key is to start now. The longer you wait, the harder it will be to catch up. So, pick a plan, start contributing, and watch your retirement savings grow. Your future self will thank you!
