
NerdWallet's Smart Money Podcast
Saving for Retirement When You’re Self-Employed: SEP IRAs, SIMPLE IRAs and Other Plans
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- Consistency of income can be a challenge for self-employed individuals, but strategies like putting oneself on payroll and setting aside a percentage of pay can help manage expenses and establish retirement savings.
- Self-employed individuals have a variety of retirement planning options available to them, including traditional retirement plans like 401(k)s, IRAs, SEP IRAs, SIMPLE IRAs, and solo 401(k) plans, each offering unique benefits and allowing for different contributions.
Deep dives
Importance of Retirement Savings for Self-Employed Individuals
Saving for retirement as a self-employed individual comes with unique challenges and considerations. Unlike traditional employment, where retirement options are usually pre-determined, self-employed individuals have a wide range of choices to make. It is crucial for self-employed individuals to prioritize retirement savings and start early, even if the early years of self-employment are not highly profitable. Consistency of income can be a challenge for self-employed individuals, but strategies like putting oneself on payroll and setting aside a percentage of pay can help manage expenses and establish retirement savings. Waiting until later in life to save can lead to missed opportunities for compound interest and financial security in retirement. By making the right decisions and contributions to retirement plans, self-employed individuals can build a solid retirement nest egg.