If you have recently decided to become self-employed, there are many things on your plate that you have to deal with. One that you may not have thought of yet is planning for your retirement. Now that you are no longer working for an employer, you do not have a company retirement fund to contribute to, and you are essentially on your own when it comes to retirement investing. You do not want to ignore or put off planning for your retirement investments because time is money, and in this case would be money lost. Get to know some of the facts you should be aware of about planning for retirement when you are self-employed. Then, you can be sure you are doing what is best for your financial future. 

You May Need to Contribute More to Your Retirement

Firstly, if you are used to having an employer-provided retirement plan like a company 401k, you are also likely used to matching contributions. This means that your company was contributing up to a certain percentage of their paycheck into your 401k. So, if you were adding 3 percent of your income into a retirement account, your company was matching that amount dollar for dollar. So, you had 6% of your total income going into retirement. 

Now that you are self-employed, you will not have that matching contribution. Therefore, you will need to plan on taking more of your monthly income and putting it into a retirement account. You alone are responsible for managing and building your retirement.

You Can Still Have a 401k

Most people assume that they can only have and contribute to a 401k when they work for an employer. However, this is not the case. There are solo 401k options available to those that are self-employed. 

This is an option available to you if you are a business owner with no employees. You must have an employer identification number registered with the IRS to open a solo 401k, though. And as an added bonus, both traditional and Roth 401k options are available, and you can cover your spouse as well as yourself with these plans. 

If you are thinking about pursuing a solo (or one-participant) 401k account, you should consult with a 401k advisor to be sure you find the best possible option for you. Oftentimes, there are account minimums and management fees to consider in addition to choosing between traditional and Roth options. 

Now that you know some of the facts you should be aware of regarding planning for retirement when self-employed, you can be sure you are doing what you can to secure your financial future.