Nobody’s Matching Your 401(k) Anymore. Here’s What to Do About It.

When you worked for someone else, retirement savings may have been almost automatic — a percentage pulled from your paycheck, maybe an employer match, a decision you made once during onboarding and mostly forgot about. When you work for yourself, nobody sets that up for you. Nobody matches your contribution. If it’s going to happen, you’re the one who has to build it.

I bring this up because it’s easy to postpone indefinitely — not because it’s not important, but because there’s always something more urgent in front of it.

You have more options than you think.

A (Simplified Employee Pension) is one of the most common choices for self-employed people: relatively simple to set up, generous contribution limits, and you decide how much to contribute each year based on how the business is doing. Solo 401(k)s are another option, with different rules and sometimes higher limits. Which one fits you is a conversation for a financial advisor or your CPA — but knowing the options exist is step one, and a lot of people don’t get that far.

Why this connects to your bookkeeping.

You can’t make a good decision about how much to contribute if you don’t know how the business actually did this year. Retirement contributions for the self-employed are often tied to your net business income — which means clean, accurate books aren’t just a tax-season nicety here.

The tax benefit is real, but it’s not the only reason to do this.

Contributions typically reduce your taxable income, which is part of why people bring this up around tax time. But the actual point is that you’re building something for yourself, on your own terms, without a company benefits department doing it automatically. If you don’t do it, nobody else will.

This doesn’t have to happen all at once.

You don’t need to max out a SEP IRA in year one to make this worth doing. A modest, consistent contribution started now beats a large one that never quite gets around to starting.

I’m not a financial advisor, and I won’t tell you which retirement vehicle to pick or how much to put away. But “I’ll think about retirement once the business is more established” is a sentence I’ve heard from people whose businesses have been established for years. Established is a moving target. Don’t wait for it.

If you want your books set up in a way that makes this decision easier when you’re ready to have it, that’s part of what I do at Kimberly Hill Business Studio.

— Kimberly

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