How Business Owners Can Actually Save for Retirement
Myth: “My business IS my retirement.”
Is it though??
How much is your business worth? Will someone actually buy it when you're ready to retire? For a fair valuation? Are your books clean? And how long will that money actually last you?
Just assuming that since your business has supported your lifestyle for the last 10, 20, or 30+ years means it’ll support you through retirement is dangerous. You can only work so long. And what if your business ceases to exist at some point? Have you thought about that risk?
Instead of putting all your eggs into that one basket, let’s actually save money for retirement through investment accounts that are built for it.
Why You Can’t Rely on Just the Business
Businesses are illiquid and uncertain. You never know how the economy will shift. Nobody can predict which industries will be thriving in 15+ years.
It’s also why I would never put someone’s entire portfolio into one stock. Because no matter how strong it looks today, there’s always risk.
If all your eggs are in one basket, you’re taking way too much risk with not just your current income, but also your future retirement. Retirement accounts let you diversify into public companies across different sectors of the economy, lowering your risk and giving your money the chance to grow.
Retirement Accounts for Business Owners
Traditional & Roth IRAs
Everyone has access to these.
Contribution limits are smaller ($7,000 in 2025, or $8,000 if 50+), but they’re a great first step.
Traditional IRA → lowers taxable income now, taxed later.
Roth IRA → taxed now, grows tax-free forever.
Even if your income is “too high” for Roth IRA eligibility, there’s still a legal workaround called the Backdoor Roth.
Solo 401(k) (my favorite)
This account is a powerhouse for business owners.
As the employee, you can contribute up to $23,000 in 2025 (or $30,500 if you’re 50+). This portion can go Roth or Traditional.
As the employer, you can contribute up to 25% of your compensation, capped at $46,000. This employer portion must go Traditional (pre-tax).
In total, you could contribute up to $69,000 ($76,500 if 50+) in 2025.
Why this matters:
If you’re in the 32% federal tax bracket, maxing out could save you as much as $22,080 in taxes this year (not including any state tax savings). Sure, you’ll eventually pay tax when you withdraw, but with good planning you could take those withdrawals in the 10–12% bracket during retirement.
And with the Roth option on the employee side, you can still lock in future tax-free growth while deferring a big chunk at today’s higher rates. It’s an incredibly flexible tool.
SEP IRA
Think of the SEP as the “easy button.”
Contributions: up to 25% of your net earnings, capped at $69,000 in 2025.
Super simple to set up, minimal paperwork.
Best for: solo business owners or those with very few employees.
But here’s the catch: if you have employees, you generally must contribute the same percentage for them as you do for yourself. That can get expensive fast.
SIMPLE IRA
Designed for small businesses with employees.
Contributions: up to $16,000 in 2025 (+$3,500 catch-up).
Employer must match up to 3% or make a 2% nonelective contribution.
Easier and cheaper to run than a full 401(k).
Best for: small teams where you want to offer a benefit without the cost of a traditional 401(k).
Defined Benefit Plans (advanced strategy)
For high earners with consistent profits.
Think of this as setting up your own pension.
Can allow six-figure contributions depending on your age and income.
Requires actuaries and ongoing administration.
Overkill for many small business owners, but incredibly effective in the right situations.
Tax Benefits Recap
Traditional contributions lower taxable income today, taxed later.
Roth contributions taxed today, but never again.
Important: contributions don’t reduce self-employment tax, only income tax.
Practical Steps to Get Started
Start small. Even $500/month adds up.
Automate contributions. Treat them like payroll.
Separate goals. Reinvest in your business and fund retirement, don’t confuse the two.
Review annually. Contribution limits change, and so does your income.
Closing Thought
Your business may provide a good living now, but don’t make the mistake of assuming it is your retirement. Markets change. Industries evolve.
Start building wealth outside your business with the right retirement accounts. You’ll thank yourself later when you can retire on your own terms.
If you need help setting up an IRA, or any other account, contact a financial professional (like me!).
