If you’re a solopreneur currently using a SEP IRA and wondering whether it was chosen intentionally or simply by default, this is a common question — and one worth unpacking.
The gap shows up clearly in the data. A 2025 nationwide survey of self‑employed Americans found that only about 21 percent of self-employed Americans contribute to retirement regularly, even though nearly half report setting aside money irregularly when extra cash is available. Meanwhile, more than half of self-employed workers aren’t saving for retirement at all, citing affordability and daily business pressures as key barriers.Why Solopreneurs Under-Save for Retirement
Unlike traditional employees who may benefit from automatic payroll deductions, employer-sponsored plans, or employer matches, self-employed workers often face these challenges:
Irregular Income: Cash flow varies widely month to month, making consistent saving difficult.
Lack of Automatic Systems: Without automatic retirement contributions, planning often falls to the bottom of the priority list.
Time Scarcity: Solopreneurs wear many hats. From client delivery to administrative tasks, their limited hours rarely accommodate strategic financial planning.
This combination means that, despite having access to highly tax-advantaged retirement plans like SEP IRAs and Solo 401(k)s, many solopreneurs simply aren’t maximizing their opportunity.
This distinction matters because many solopreneurs are saving — but doing so within a structure that quietly limits flexibility as income grows.
Understanding Your Options: SEP IRA and Solo 401(k)
If you’re self-employed, two of the most powerful retirement vehicles available are:
SEP IRA (Simplified Employee Pension IRA):
Allows contributions up to 25% of net self-employment income, with limits increasing to $72,000 in 2026.
Pros: Extremely simple to set up, easy to maintain.
Cons: No Roth option or catch-up contributions.Solo 401(k):
Offers both employee and employer contribution components — often enabling higher total contributions. Around 15–21% of retirement-saving solopreneurs currently utilize Solo 401(k)s, signaling both room for growth and widespread utility.
Pros: Higher potential contributions, Roth options, and loan flexibility in many plans.
Cons: Slightly more administrative work than a SEP IRA.
Decision Fatigue & Default Bias
Why simple becomes permanent.
Many solopreneurs delay or under‑optimize retirement planning simply because there is no obvious default — and when one does present itself (like a SEP IRA), it often goes unquestioned.
Both options provide significant tax advantages, making disciplined contributions not just a retirement strategy but a tax planning strategy as well.
Both plans are powerful, but they were designed for different planning needs. Choosing between them without understanding the trade‑offs is where many solopreneurs unintentionally limit themselves.
The Power of Automation: Turning Time Saved Into Retirement Contribution Time
Here’s where many solopreneurs miss a critical connection: your most valuable resource isn’t just money — it’s time.
When routine tasks take hours each week — such as invoicing, scheduling, client follow-ups, or bookkeeping — valuable time that could be spent on revenue-generating work is instead consumed by administrative overhead.
By implementing automation tools — from calendar and workflow automation to AI-enhanced CRM systems — solopreneurs can work to free up hours every week. Those reclaimed hours can then be redirected toward activities that help generate revenue, such as:
Client delivery work
Marketing that drives new business
Strategic networking
Value-added services that command higher fees
If you automate tasks and reclaim 5–10 hours per week, and you invest that time into billable or new business work, you can meaningfully increase revenue that directly funds retirement contributions.
In essence, automation doesn’t just save time — it can create the revenue lift you need for consistent retirement funding.
Realign Your Time With Your Retirement Goals
Here’s a simple framework to get started:
Audit Your Week: What tasks consume your time without directly generating revenue?
Identify Automation Opportunities: Use inexpensive or free tools to automate repetitive tasks.
Reconnect Time With Revenue: Use the time regained to deepen client work or find new opportunities.
Allocate Additional Revenue to Retirement: Use plans such as a SEP IRA or Solo 401(k) to make regular, strategic contributions.
Review Plan Design Periodically: Business income evolves. Retirement plans should, too.
Your Retirement Strategy Starts With a Plan
Retirement planning shouldn’t be an afterthought — it should be integrated into the way you run your business. Whether you’re just starting to save or looking to optimize your contribution strategy, a thoughtful financial plan can bridge the gap between intent and real results.
To explore how to build a tailored retirement strategy that works with your business model — not against it — visit our Retirement Resource Center for solopreneurs and business owners here:
https://www.bas-financial.com/resource-center/retirement
Take the Next Step With a Complimentary Consultation
If you’re unsure whether your retirement strategy reflects intention or inertia, that question is often worth exploring — especially as income and complexity increase.
We help solopreneurs evaluate retirement planning decisions in context, as part of a broader wealth coordination process.
Common Questions Solopreneurs Ask
Is a SEP IRA bad?
No. It can be effective in the right circumstances — the issue is when it’s used by default rather than by design.Is a Solo 401(k) always better?
Not necessarily. It offers more flexibility, but that flexibility isn’t always needed.Do I need to earn more for a different plan to matter?
Not always — plan structure, income consistency, and business entity type all play a role.
References
Only 1 in 5 Self-Employed Americans Contribute Regularly Toward Their Retirement, PensionBee — https://www.pensionbee.com/us/blog/only-1-in-5-self-employed-americans-contribute-regularly-toward-their-retirement
Solo 401k Adoption in the U.S. (2025): Growth Trends, Demographics, and Stats, Carry — https://carry.com/learn/solo-401k-adoption-in-the-us-stats
SEP IRA vs. Solo 401k: Retirement Plans for the Self-Employed, Britannica — https://www.britannica.com/money/solo-401k-vs-sep-ira-plan
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San Diego, CA 92121