retirement planningWhen you are working for yourself, you may not have a human resources person or retirement specialist working for the company with which you are employed to help guide you through your retirement options. You may have to rely on yourself.

As a self-employed individual, you have many of the same tax-deferred options as employees who participate in company plans, but there are important differences, too. To maximize your retirement, consider these tips to help you plan for retirement.

Weigh all of your options. You can choose between SEP IRAs, Simple IRAs, and individual 401(k)s to benefit from immediate tax breaks and tax-deferred growth. With these plans, you don’t have to pay taxes until you withdraw your money.

If you decide to invest in a Roth 401(k)—a plan that combines features of a traditional 401(k) with a Roth IRA—you won’t get the immediate benefit of tax breaks, but you can withdraw money in retirement without having to pay taxes.

Budget, budget, budget. You can’t save for retirement if you aren’t willing to put the money aside to do so. Unlike employees, who can automatically have part of their paychecks deposited into an employer-sponsored retirement plan, it’s up to you to set aside the money. Create a budget that allows you to put 15 percent to 20 percent of your annual income toward retirement, and make regular deposits into your retirement account.

Protect your retirement account. There are two things that can drain your retirement account and completely change your retirement plan: death and illness. Consider opening a tax-deductible health savings account (HSA). Your money will grow in the HSA until you have to take it out for qualified expenses, which include approved medical, dental, and vision expenses.

In addition, be sure to set up a long-term care plan. If you or your spouse requires long-term services and you don’t have enough money, or if your insurance company doesn’t offer adequate coverage, you will need to find some way to pay for the care. That puts everything you own up for grabs, including your home and your assets.

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Understand Social Security. As a self-employed worker, you are still entitled to Social Security benefits because you pay the 15.3 percent Social Security tax. Make sure you don’t try to reduce your net earnings each year to avoid paying a large amount in Social Security tax because this can come back to haunt you later. You will need 40 credits to qualify for Social Security income in retirement, and reducing your earnings now can result in you not earning enough to qualify for benefits down the road.

Take advantage of deductions. Write off your retirement contributions when you file your income taxes. Pay close attention in order to maximize contribution levels, and discuss your options with a qualified tax professional.

Jeff Rose is a Certified Financial Planner and Iraqi combat veteran. He blogs at Good Financial Cents, Soldier of Finance and Life Insurance By Jeff.