When you work for yourself, there is no HR department automatically enrolling you in a 401k and no employer match landing in your account. Retirement saving is entirely your responsibility, and it is easy to keep pushing it back when current expenses feel more urgent. But the tax advantages available to self-employed people are genuinely significant, and the accounts designed for them have higher contribution limits than most people realize.
A SEP-IRA is the easiest starting point
A Simplified Employee Pension IRA, or SEP-IRA, is one of the most straightforward retirement accounts for self-employed people. You can contribute up to 25 percent of your net self-employment income, with a 2025 cap of $70,000. Contributions are tax-deductible, so they reduce your taxable income in the year you make them. There is no annual administrative filing requirement, and most brokerage firms can open one in about 15 minutes. You have until your tax filing deadline, including extensions, to make contributions for the prior year.
A Solo 401k allows even higher contributions
If you have no employees other than yourself and possibly a spouse, a Solo 401k lets you contribute as both employer and employee. As an employee you can contribute up to $23,500 in 2025, plus an additional $7,500 if you are 50 or older. As the employer you can contribute up to 25 percent of compensation on top of that. The combined limit is the same $70,000 as the SEP-IRA, but the employee contribution portion makes it possible to shelter more income at lower income levels. Some Solo 401k plans also allow Roth contributions, which the SEP-IRA does not.
A SIMPLE IRA is an option if you have employees
If you have a small number of employees, a SIMPLE IRA allows you and your employees to contribute. Employee contributions are capped at $16,500 in 2025, and you are required to make matching or nonelective contributions on their behalf. It is more complex than the SEP-IRA or Solo 401k but allows you to offer a retirement benefit if you have a small team.
A Roth IRA fits alongside any of these
If your income allows it, a Roth IRA can complement your primary retirement account. Contributions are not deductible, but withdrawals in retirement are tax-free. The 2025 contribution limit is $7,000, or $8,000 if you are 50 or older. Roth IRAs phase out for single filers with income above $150,000 and married filers above $236,000, but income below those thresholds makes them worth funding alongside a SEP-IRA or Solo 401k.
Consistency matters more than the account type
The most important thing is simply to start and be consistent. With variable income, saving a percentage of every payment rather than a fixed monthly amount works better than waiting for a month where it feels convenient. Even modest regular contributions to any of these accounts, started early, make a meaningful difference by retirement.