For many, being self-employed is a dream come true. No longer are you forced to waste years of your life hoping to climb the corporate ladder.

You’re not just part of the business, you are the business. While being in complete control of your future definitely has an appeal, it also poses a problem: you—and you alone—are responsible for determining the best retirement solutions!

Whether this is something you’ve already thought of or a new realization, you’re in the right place. By the end of this article, you’ll know all the options that are available to you!

Skip the Savings Account

Simply having a savings account is fine, but relying on it entirely won’t prepare you for your later years. Even “high-yield” savings accounts only earn an APY of around 1.50{57b8cc37fd24bce1cf64c8b05d9407ce9171516056c1f5e762677747187a0de4}, which is only marginally better than storing cash for retirement. If you want to set your future self up for success then you’ll need to find a way to make your money grow.

And even with APY rates changing all the time, you are only likely to see a 1{57b8cc37fd24bce1cf64c8b05d9407ce9171516056c1f5e762677747187a0de4} increase in either direction, as the numbers are pretty stable. If you want to know what the current rates are, simple visit Google and ask, or you can also take advantage of sites like NerdWallet, which usually list a wide range of higher paying options.

We’ll be explaining the options below, but while reading, you should consider how long you have until you plan to retire. This timeframe not only affects which methods are most viable but will also help you determine your realistic risk tolerance!

Start a Solo (401)k

Referred to as a solo (401)k, uni-401(k), or individual (401)k, this type of (401)k is essentially the same as other (401)k plans. However, these retirement solutions can only be utilized by a business owner without any employees (your spouse doesn’t count as an employee for these requirements)!

A solo (401)k will allow you to contribute up to 25{57b8cc37fd24bce1cf64c8b05d9407ce9171516056c1f5e762677747187a0de4} of your business earnings into the account, although the exact monetary limitations vary from year to year. 

Consider an IRA

Individual Retirement Accounts (IRAs) are popular retirement solutions. As a self-employed business owner, you have a few different IRA types to choose from including traditional, Roth, Simplified Employee Pension (SEP), and SIMPLE IRAs. Traditional and Roth IRAs are perfect for individuals.

If you have a few employees, a SEP IRA may be viable, although you will have to contribute for each employee. For businesses with up to 100 employees, a SIMPLE IRA is best as the contributions required per employee are lower.

When preparing any type of SEP, IRA or retirement plan, it’s always important to look over the official IRS website to see what requirements and maximum limits are in place. You can see a preview of such statements below.

Don’t Wait to Invest

Investing can be an excellent way to grow your wealth over time. Sadly, the world of investing is a mystery to many, so they miss out on profitable opportunities because they don’t know what to do!

Programs like Motley Fool’s Rule Your Retirement are designed to help will-be retirees learn how to manage and maximize their money for their later years. However, for those who already know a thing or two about preparing for retirement, it may be worthwhile to get right into investing instead.

Robo-Advisors

Rather than hiring a financial advisor, the modern solution is to use a robo-advisor instead! The process is simple: determine your risk tolerance, deposit funds, and watch your portfolio grow.

While the returns you get from a robo-advisor may not be as profitable as alternative options, this route requires almost no effort on your part. Services like Acorns manage your portfolio according to your risk tolerance, which means you only need to deposit funds. There’s no asset management required!

Stock-Picking Services

If you find the idea of trusting a robot to manage your portfolio offputting, consider subscribing to a stock-picking service instead. Some services recommend volatile assets that offer great gains (with great risk), whereas other services suggest lower-risk, consistent-gain assets.

One such example is Everlasting Stocks, which recommends stocks that should continue to increase in value throughout your lifetime. The advantage of this approach is that you are in complete control of your assets.

If a recommendation seems off, you don’t have to buy that stock! On the other hand, these types of services don’t manage assets, so you’ll have to complete the trading process yourself.

Create a Defined Benefit Plan

High-earners may be less concerned about their retirement plans, but that doesn’t mean you should be selling yourself short! Those making a lot might not see the value in investment tools like an IRA, as the contribution limitations can be quite low.

Fortunately, the same isn’t true for a Defined Benefit plan: the contribution limit is currently $245,000! Beyond the high limits, a Defined Benefit plan also offers tax benefits (similar to many other retirement solutions).

Selecting the Proper Retirement Solutions

Each individual has their own retirement requirements and goals, so you should focus entirely on your personal situation and avoid comparing yourself with others. While a Roth IRA may be perfect for someone who’s just beginning to save, investing could be a smarter choice for individuals who’ve already met the contribution limitations. A Defined Benefit Plan could be ideal for a high-earner with no time to invest (and no savings to speak of!).

Take the time to sit down, analyze your situation, and determine which options will help you maximize your money in the time you have. The best time to prepare for retirement is right now!