Self-employment can be a very fruitful avenue for many individuals. There are a multitude of possibilities, and due to the advent of the Internet a lot of people can actually work from home these days.
Those who work for an employer are often offered the opportunity to contribute into a 401(k) plan as they look forward to retiring someday. People who work for themselves are not going to have this option, so they must take matters into their own hands.
You can in fact open a self-employed 401(k) account if you work for yourself.
When you work for a company and contribute into the 401(k) plan at work the contributions are deducted from your check before taxes are applied. As a self-employed individual you have to be proactive about making the deposits but they are tax-deferred as well.
The maximum tax-deferred contribution that one can make into a self-employed 401(k) in 2013 is $17,500. This is an increase of $500 over the maximum that was in place last year.
It should however be noted that you are offered an opportunity to “catch up” if you are at least 50 years of age. Those who are 50 years old and older can add an additional $5500 in tax-deferred contributions in 2013.
Social Security payouts are quite modest, and there are ever-rising out-of-pocket Medicare costs to pay when you are a senior citizen.
Given the limitations of these programs planning ahead to feather your own nest is necessary if you want to be able to retire. If you are self-employed you would do well to discuss your future with a good retirement planning lawyer if you are not currently working within a professionally prepared financial plan.