Reader Question: Saving for Retirement When You’re Self-Employed

If you have questions about your finances, you are not alone. In fact, here at Your Finances Simplified we often receive financial questions from our readers.

For example, one of our readers, Kathy, recently asked another question about saving for retirement:

What’s the best way to save for retirement when you’re self-employed?

The Answer

Great question! Self-employment offers both challenges and opportunities. As you probably know, the self-employed are not excused from Social Security taxes and are, of course, eligible to receive SSI upon retirement. The self-employed pay in at the same rate as everyone else, but they pay into Social Security under SECA (Self-employed Contributions Act). Being self-employed, the net income of the business or their ownership share of that business governs contribution limits. Apart from Social Security, the self-employed person can take advantage of the Simplified Employee Pension IRA (SEP IRA) or the Solo 401k.

All conventional retirement investment options such as the Roth IRA, stocks, bonds and so forth are available to the self-employed individual as well.

In short, retirement investment options are slightly broader for a self-employed person but not radically different from any of us regular saps who work for someone else. That said, there is no “best way” I can suggest for any individual’s retirement plan without a butt load of additional information.

All I will say is that developing a solid plan and sticking by it is the best path to a successful retirement. The details of any retirement investment plan will vary from person to person.

Thanks Kathy for your question! We hope this helps you get started! If you have a financial question, send us an email at! Our experienced team can help with a variety of financial topics.


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