In this week's 'Plan Ahead' series, we want to address those that are self-employed or considering self-employment. As a self-employed individual, you are responsible for paying Social Security and Medicare taxes. This tax is known as self-employment tax, calculated on your net earnings from self-employment. The self-employment tax rate is 15.3%, which is made up of 12.4% for Social Security and 2.9% for Medicare.
The good news is that you can deduct half of your self-employment tax from your taxable income, helping to reduce your overall tax burden.
In addition to paying self-employment tax, it is crucial to start saving for retirement as early as possible. As a self-employed individual, you cannot access a retirement plan through an employer, meaning you will need to take the initiative to save for retirement on your own; this is where the 'plan' comes in.
There are several different retirement savings vehicles available to self-employed individuals. These include:
- Individual Retirement Accounts (IRAs)
- Self-employed 401(k) plans
- SEP IRAs
- SIMPLE IRAs
Each of these retirement savings vehicles has its advantages and disadvantages. Speaking with a financial advisor to determine which retirement savings vehicle is right for you is essential.
Working with an LPL Financial Advisor at Dixon Financial Group, LLC can benefit self-employed individuals looking to save for retirement. Our advisors can help you to:
- Choose the right retirement savings vehicle
- Develop a retirement savings plan
- Monitor your retirement savings progress
- Assess whether you are on track to reach your retirement goals
If you are self-employed, unsure how to save for retirement, and need to put your 'plan' into action, contact an LPL Financial Advisor at Dixon Financial Group, LLC today. We can help you create a retirement savings plan that meets your needs. There are many benefits to working with our advisors. Here are just a few:
- Experience: Our advisors have the experience and knowledge to help you make sound financial decisions.
- Access to resources: We have access to various financial resources, including investment research, market data, and retirement planning tools.
- Personalized service: We will work with you one-on-one to understand your needs and goals.
- Competency: Our advisors are held to the highest ethical standards and must complete continuing education to stay up-to-date on the latest financial trends.
If you need help with your financial planning, contact David Dixon, CFP®, and Jacob Bierstedt, CFP®, ChFC, today. We will work towards reaching your financial goals. Contact us today at team@dfgadvisors.net or call 702.982.2479.
Do you know someone who is self-employed, 'share' this information with them so they can begin to secure their financial future?
David S. Dixon, CFP®
Jacob S. Bierstedt, CFP®, ChFC