The BEST Retirement Accounts for Entrepreneurs

by Finance Tips

I know, I know, it’s not exactly as thrilling as landing a new client or launching a new product. But trust me, your future self will be high-fiving you for reading this. So grab your favorite beverage, and let’s dive into the world of retirement accounts for us entrepreneurs!

Why Should You Care About Retirement Accounts?

Before we get into the nitty-gritty, let’s talk about why this matters:

  1. Tax benefits: Who doesn’t love paying less in taxes? (If you raised your hand, we need to talk.)
  2. Compound interest: It’s like a snowball effect, but with money. Your money makes money!
  3. Future you will be grateful: Imagine choosing between sipping margaritas on a beach or working in your later years. That’s the power of planning ahead.

Now that we’re on the same page let’s look at the best retirement account options for us boss ladies.

1. Solo 401(k): The Overachiever of Retirement Accounts

If you’re a solopreneur or have a business with just you and your spouse, the Solo 401(k) is your new best friend.

Pros:

  • High contribution limits: Up to $69,000 in 2024 (or $76,500 if you’re 50 and up!)
  • You can contribute as both the employer and employee
  • Roth option available (hello, tax-free withdrawals in retirement!)

Cons:

  • More paperwork than some other options
  • Not suitable if you have employees (other than your spouse)

Best for: High-earning solopreneurs who want to stash away a lot of cash for retirement.

2. SEP IRA: Simple and Sweet

SEP stands for Simplified Employee Pension, and it lives up to its name.

Pros:

  • Easy to set up and maintain
  • High contribution limits: Up to 25% of your net self-employment income or $69,000 (whichever is less) for 2024
  • Contributions are tax-deductible

Cons:

  • No catch-up contributions for those 50 and older
  • If you have employees, you have to contribute the same percentage for them as you do for yourself

Best for: Entrepreneurs with few or no employees who want a simple, high-contribution option.

3. SIMPLE IRA: Not Just for Small Businesses

Despite its name, the SIMPLE IRA (Savings Incentive Match Plan for Employees) can be a great option for entrepreneurs.

Pros:

  • Higher contribution limits than traditional IRAs: $16,000 in 2024 (or $19,500 if you’re 50 or older)
  • Employer contributions are tax-deductible
  • Less paperwork than a 401(k)

Cons:

  • Lower contribution limits than SEP IRAs or Solo 401(k)s
  • Mandatory employer contributions if you have employees

Best for: Entrepreneurs with a few employees who want a balance between simplicity and solid contribution limits.

4. Traditional or Roth IRA: The Classic Retirement Accounts

Don’t overlook these classic options. They’re like the little black dress of retirement accounts – always in style.

Pros:

  • Easy to set up and maintain
  • Roth IRA offers tax-free withdrawals in retirement
  • Can contribute even if you have another retirement account

Cons:

  • Lower contribution limits: $7,000 in 2024 (or $8,000 if you’re 50 or older)
  • Income limits for Roth IRA contributions

Best for: Entrepreneurs who want an easy supplemental retirement account or those just starting out.

How to Choose the Right Account for You

Feeling a bit overwhelmed? I get it. Here’s a quick guide to help you decide:

  1. If you’re a high-earning solopreneur: Go for the Solo 401(k).
  2. If you want simplicity and high contributions: SEP IRA is your jam.
  3. If you have a few employees: Consider the SIMPLE IRA.
  4. If you’re just starting out or want to supplement: Traditional or Roth IRA.

Remember, you’re not locked into one choice forever. As your business grows and changes, you can switch up your retirement strategy too.

Final Thoughts: Your Future Self Will Thank You

Listen, I know retirement planning isn’t the most exciting part of being an entrepreneur. But it’s like eating your vegetables – not always fun, but so good for you in the long run.

Don’t let the daily hustle make you forget about your future. Taking steps now to build your retirement nest egg means more freedom and less stress down the road. And isn’t that why we became entrepreneurs in the first place?

So, which retirement account are you leaning towards? If you need any help, book a call with us!

If you liked this please share…

Silvia Manent, Manent Capital

Silvia Manent, CFA, CFP®

Silvia is the Founder and Managing Partner of Manent Capital, a Boston-based wealth management firm that focuses on helping women understand their personal and business finances so that they can feel accomplished, confident and excited about investing in their future dream goals.

Categories

Financial Security Toolkit for Women

Unlock your financial future with a toolkit designed for every woman

Related posts

Real Talk: Financial Tracking for Female Bosses

Real Talk: Financial Tracking for Female Bosses

Let's talk about something that's probably not your favorite topic, but trust me, it's a game-changer: financial tracking. I know, I know, you'd rather be creating amazing content, closing deals, or literally anything else. But stick with me here – this stuff is gold...