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 - SEP IRAs (Simplified Employee Pension Individual Retirement Accounts) offer tax-deferred growth for businesses of all sizes, but they tend to be best suited to self-employed individuals, small-business owners, or members of a partnership. That’s because if a business establishes a SEP IRA, it must open and contribute an equal percentage of income to all eligible employees’ accounts, up to a contribution limit of $70,000 for tax-year 2025. 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 $70,000 for tax-year 2025—since you can contribute as both an employer and employee. Many plans also offer a Roth option, allowing after-tax contributions with the potential for tax-free withdrawals in retirement. This combines the high limits of a 401(k) with the tax advantages of a Roth IRA. 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).
Individual retirement plan options
- Traditional IRA - A traditional IRA lets you make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement,2 when you may potentially be in a lower tax bracket.3
- Roth IRA - A Roth IRA lets you make contributions with money you've already paid taxes on (after-tax), and the potential growth of invested assets is tax-deferred, with tax-free withdrawals in retirement, provided that certain conditions are met.4
You can contribute to a traditional or Roth IRA and a small business retirement plan at the same time; however, some or all your IRA contributions may not be tax deductible.
Not sure which plan is right for you?
Take our 5-minute quiz to compare small business retirement plans and find the right fit for your situation. Compare plans now.
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 employer and employee. Benefits include:
- Triple tax advantages5 – Your HSA contributions can be tax-deductible. You can spend your money on certain medical expenses tax-free6 and any growth is tax-free.
- It's investable – Investing your unused HSA money may be something to consider to help with your 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?