Freelancers and small business owners need to be especially proactive about setting aside money for the future. This includes longer-term savings goals like retirement.
Self-employed retirement plans
Whether you’re planning to retire early or keep working well past traditional retirement age, you’ll need savings at some point. The good news is that being self-employed gives you access to certain tax-advantaged retirement accounts with high contribution limits that can get you saving now. Here are some options to consider:
- SEP IRA
A Simplified Employee Pension or SEP IRA offers tax-deferred growth for individuals or small businesses with 1 to 4 employees, while allowing contributions up to $69,000 for tax-year 2024. To learn more, read Understanding the SEP IRA.
- Self-employed 401(k)
If it’s just you or you and a spouse working for your business, a self-employed 401(k) lets you put aside money tax-deferred or tax free. It features higher contribution limits—up to $69,000 for tax-year 2024—since you can contribute both as an employer and employee. To learn more, read Understanding the Self-Employed 401(k).
- SIMPLE IRA
A Savings Investment Match Plan for Employees (SIMPLE IRA) is a plan for businesses with fewer than 100 employees. Contribution limits are much lower than those of a self-employed 401(k) and SEP IRA. To learn more, read Understanding the SIMPLE IRA.
- Fidelity Advantage 401(k)℠
The Fidelity Advantage 401(k) is a pooled employer plan designed specifically for growing small businesses. It features all the benefits of a 401(k) plan such as higher contribution limits and an employer match,1 with a simplified plan design and reduced administrative responsibilities. To learn more, explore Fidelity Advantage 401(k).
If you’re not ready to open a plan for your business, consider saving for retirement in a traditional IRA or Roth IRA until you’re ready to take the next step as an employer. To learn more, read What is an IRA.
Not sure which plan is right for you?
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Saving for retirement with an HSA
If you’re enrolled in an HSA-eligible health plan, another long-term savings option to consider when you’re self-employed is a health savings account (HSA). You'll save 15.3% in tax on any contributions since you're paying as both employer and employee. Benefits include:
- Triple tax advantages2 – Your HSA contributions can be tax-deductible, you can spend your money on certain medical expenses tax-free,3 and any growth is tax-free too.
- It's investable – Investing your unused HSA money may be something to consider to help take the sting out of retirement health care costs.
- It's your money – Your savings aren’t “use it or lose it”—your money can accumulate year over year. Keep your HSA if you move or change insurance.
To learn more, read What is an HSA, and how does it work?