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How Women Entrepreneurs Can Turn the Retirement Tide in Their Favor

By Dmitriy Fomichenko, President and Founder of Sense Financial


"The way to build your savings is by spending less each month." - Suze Orman, American Author & TV Personality

What an excellent piece of advice from one of the most popular women entrepreneurs of the country. It's interesting to know that 45 percent of the millionaires in America are women, amassing nearly $11.2 trillion dollars.

In addition to it, as many as 9.1 million businesses in the US are owned by women entrepreneurs, another feat to add to their exponential growth.

However, when it comes to retirement savings, women fall behind their male counterparts. Out of the 63 million working women in the country, only 45 percent participate in a retirement plan, with their retirement savings matching only half of their male peers.

While the financial outlook may not appear as brilliant for women as it should, there are some options that can help them cover-up this retirement-savings gap.

Self-Directed Solo 401k Retirement Account: A plan to Supercharge Your Retirement Portfolio

Solo 401k is a qualified retirement plan that targets owner-only businesses and self-employed professionals. For women entrepreneurs, it allows higher retirement savings, alternative investment options, and financial flexibility.

Eligibility criteria: Presence of self-employment activity & absence of full-time employees.

Four Reasons Why Self-Directed Solo 401k is Popular Among Solopreneurs

  1. Higher contribution limits: With a Solo 401k plan, you can contribute up to $60,000 annually, including a catch-up contribution of up to $6,000 for professionals above 50 years.
  2. Alternative investments: A self-directed Solo 401k plan allows alternative investments, which means you can invest your retirement funds in real estate, precious metals, mortgage notes, tax liens/deeds, private lending, private equity, and much more. However, the investment options may vary from provider to provider. Make sure to choose a plan provider that allows alternative investments.
  3. Roth contributions: For owner-only businesses and self-employed professionals that are unable to make Roth contributions because of their income level, Solo 401k retirement plans offer a Roth component. You can contribute up to $24,000 annually to your Roth Solo 401k plan. With a Roth Solo 401k plan, you contribute post-tax dollars and your withdrawals are tax-free.
  4. Participant loan: Solo 401k retirement plan offers additional financial flexibility by allowing eligible plan participants to borrow from their retirement plan. Every eligible plan participant can borrow up to 50% of the account balance or $50,000, whichever is lower. The loan is payable over a period of 5 years and is available at attractive interest rates (prime rate plus one percent).

Self-Directed IRA: Alternative to Solo 401k Plan

In case you do not qualify for a Solo 401k plan, a self-directed IRA (SD IRA) is another promising retirement option to consider. The primary attraction of an SD IRA plan is its ability to invest in alternative assets.

When planning for retirement, the key is to start savings as soon as possible. All you need is a financial strategy that aligns with your retirement goals.

Dmitriy Fomichenko is President and Founder of Sense Financial, a leading provider of retirement accounts with "Checkbook Control": The Solo 401k and the Checkbook IRA. To learn more about the Solo 401k plan, please visit sensefinancial.com or email us at info@sensefinancial.com.


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