Best Retirement Plans for the Self-Employed: Secure Your Future Today

Self-employed person planning retirement

Being self-employed comes with incredible freedom — but it also means you’re responsible for your own retirement savings. Unlike traditional employees, you don’t have a company-sponsored plan waiting for you. So, what are the best retirement plans for the self-employed? How can you maximize your savings while benefiting from tax advantages and flexibility? This guide breaks down your top options, helping you find the perfect fit for your unique situation.

Why Retirement Planning Matters for the Self-Employed

Self-employment often means irregular income and no employer contributions, which can make retirement planning feel complicated. But it’s essential to start early and choose a plan that aligns with your income, goals, and business structure. The right retirement plan not only helps you build a nest egg but can also reduce your taxable income today.

Top Retirement Plans for the Self-Employed

Here are the most popular and effective retirement plans tailored for self-employed individuals, freelancers, and small business owners.

1. Solo 401(k): The Powerhouse Plan for the One-Person Business

The Solo 401(k) is widely considered the best all-around retirement plan if you’re self-employed with no employees (except possibly a spouse). It combines the benefits of a traditional 401(k) with added flexibility and higher contribution limits.

Key Benefits:

Dual contributions: You can contribute both as an employee and as an employer, maximizing your savings potential.
High contribution limits: For 2025, employee contributions can be up to $22,500 (or $30,000 if age 50+), plus employer contributions up to 25% of your net earnings.
Roth option: You can make after-tax contributions that grow tax-free.
Flexible investments: Depending on your provider, you can invest in stocks, bonds, mutual funds, and sometimes alternative assets.
Spousal participation: Your spouse can also contribute if they work in the business.

This plan allows you to save aggressively and enjoy tax advantages that fit your income level and retirement timeline.

2. SEP IRA: Simple and Flexible for Variable Income

A Simplified Employee Pension (SEP) IRA is another excellent option, especially if your income fluctuates. It’s easy to set up and maintain, making it popular among freelancers and small business owners.

Highlights:

You contribute as the employer only, up to 25% of your net earnings, with a maximum of $66,000 in 2025.
Contributions are tax-deductible and grow tax-deferred.
No employee contributions allowed, so it’s straightforward but with less flexibility than a Solo 401(k).
No Roth option.
Minimal administrative hassle.

The SEP IRA works well if you want flexibility in contribution amounts each year based on your earnings.

3. SIMPLE IRA: Great If You Have Employees

The Savings Incentive Match Plan for Employees (SIMPLE) IRA is designed for small businesses with up to 100 employees but is also suitable for sole proprietors who want a straightforward plan with lower administrative requirements.

Advantages:

Employees can contribute up to $15,500 in 2025 ($19,000 if 50+).
Employers must either match contributions dollar-for-dollar up to 3% of compensation or contribute 2% for all eligible employees.
Contributions are tax-deductible and grow tax-deferred.
Easier to administer than traditional 401(k)s.
No Roth option.

If you expect to have employees or want to encourage retirement savings for your team, the SIMPLE IRA lets you do that without complex paperwork.

4. Traditional and Roth IRAs: Foundational and Flexible

IRAs (Individual Retirement Accounts) are a foundational retirement savings vehicle open to anyone with earned income, including the self-employed.

Traditional IRA: Contributions may be tax-deductible, and earnings grow tax-deferred until retirement withdrawals.
Roth IRA: Contributions are made with after-tax dollars, but earnings and qualified withdrawals are tax-free.

Contribution limits for IRAs are lower than other plans ($7,000 for under 50 and $8,000 for 50+ in 2025), but they’re easy to open through banks or brokerage firms and can complement other retirement plans.

IRAs offer simplicity, flexibility, and tax advantages, making them a smart choice to supplement other retirement savings.

5. Keogh Plans: For Larger Small Businesses

Keogh plans are more complex but allow higher contribution limits for self-employed individuals with employees who want a defined-benefit or defined-contribution plan.

Higher setup and administration complexity.
Contributions depend on plan type but can be very generous.
Often used by self-employed professionals with several employees.

If you’re running a growing business and want to prioritize retirement savings, this might be a fit, but it requires more paperwork and possibly professional help.

6. Health Savings Account (HSA): A Retirement Saving Sidekick

While not a retirement plan per se, an HSA paired with a high-deductible health plan offers triple tax advantages:

Contributions are tax-deductible.
Earnings grow tax-free.
Withdrawals for qualified medical expenses are tax-free.

Unused HSA funds can be used for retirement healthcare costs or, after age 65, for any purpose (though withdrawals not for medical expenses are taxed as income).

It’s a smart supplement, especially for self-employed individuals who want to manage healthcare costs and save for retirement simultaneously.

How to Choose the Best Plan for You

Selecting the right retirement plan depends on several factors:

Factor	Best Plan Option(s)	Notes
Maximize contributions	Solo 401(k), SEP IRA	Solo 401(k) allows employee + employer contributions
Simplicity & low admin	Traditional/Roth IRA, SEP IRA	IRAs and SEP IRAs are easier to maintain
Have employees	SIMPLE IRA, Keogh, SEP IRA	SIMPLE IRA balances ease and employee inclusion
Want Roth options	Solo 401(k), Roth IRA	Roth contributions grow tax-free
Variable income	SEP IRA, Solo 401(k)	SEP IRA is flexible; Solo 401(k) allows control
Plan for healthcare	HSA + any retirement plan	Triple tax advantage for healthcare savings

Tips for Successful Retirement Planning as a Self-Employed Individual

Start early and contribute consistently. Even small amounts add up over time.
Maximize your allowable contributions. Especially if you have a good income year.
Consider a mix of plans. For example, a Solo 401(k) plus a Roth IRA for tax diversification.
Review and adjust annually. Your income and goals may change.
Plan for withdrawals strategically. Consider tax implications and required minimum distributions.
Consult a financial advisor or tax professional. To optimize your choices based on your unique tax and income situation.

Final Thoughts: Secure Your Future on Your Terms

Being self-employed means you’re in the driver's seat — including when it comes to retirement. The Solo 401(k) stands out as the most powerful and flexible option for many, but SEP IRAs, SIMPLE IRAs, and IRAs also offer solid, accessible ways to build your retirement nest egg.

The key is to understand your options, start planning early, and pick a strategy that fits your business and lifestyle. With the right retirement plan, you can enjoy the freedom of self-employment and the peace of mind that your financial future is secure.