- Planning for Retirement is Important
- The Great Resignation is affecting Many Americans
- The Solo 401(k) Can Help You Pursue Your Goals
Are you one of the many, many Americans taking part in the Great Resignation? If you are, or if you’ve been forced from work because of the pandemic, you may be weighing all your options right now. But if you’ve saved for retirement, it’s important to keep saving and making certain your retirement goals are still being pursued.
What Is The Great Resignation?
Without question, there have been major changes and challenges over the last few years. What that means is that many people are more concerned about their health, their family’s health, the amount of time spent commuting, whether they like a job that they’re commuting to, and so on.
What’s making people so dissatisfied? Many, many people were laid off or furloughed during the height of the pandemic. This felt like employers in mega-corporations weren’t doing enough to keep their employees onboard. Smaller companies went out of business, and some owners are taking this time to reflect on what they want to do next.
The Great Resignation refers to the current phenomenon when people are leaving their jobs in droves due to dissatisfaction. Workers in the past few decades have been valued less and less, and this has finally reached a boiling point. With so many workers, there are those who have suggested there is a lack of willing workers, but this is not technically the case; what’s occured is that workers are beginning to recognize their own worth and are determined, or hopeful, that they will be able to find employment suitably inspiring.
Your Retirement and The Great Resignation
As you continue to pursue goals and dreams of your own, perhaps it will be time to really face your future and try something new. This could mean pursuing a passion project, or following in the family business, or any number of other things. Just make certain as you go on your path that your retirement savings are something you have kept in view.
A Solo 401(k) plan is a 401(k) qualified retirement plan that was designed for self-employed individuals and small business owners with no full-time employees, excluding a business partner and spouse. Much like the traditional 401(k), this unique plan encourages individuals to save for retirement in a tax-advantaged environment. When participants contribute funds into the Solo 401(k), taxes on the funds will be deferred until the participant takes a qualified distribution.
The Solo 401(k) is an IRS-approved plan that has the same rules and requirements as a traditional employer-sponsored 401(k). However, the Solo 401(k) allows participants to make annual contributions to the plan as both an employee and employer, which ultimately increases the yearly maximum contribution limit.
Also known as a self-employed 401(k) or individual 401(k), individuals can benefit even if they generate a portion of their total income through self-employment activities, such as a freelance gig. What are the Benefits of the Solo 401k?
The Solo 401(k) plan provides many benefits to individuals who are eligible for the plan, including the ability to make higher contributions. For example, the total annual contribution for a Solo 401(k) is $58,000 for participants who are under 50. Participant who are age 50 and over can contribute up to $64,500 to the plan in 2021. This is because the Solo 401(k) has two types of contributions:
- Employee salary deferral contribution: Employees can contribute up to $19,500
- Employer profit-sharing contribution: The annual limit is 25% of the employee’s pay, or 20% if you’re self-employed
Planning Your Future By Living Your Dream
If you’re part of the Great Resignation and you’re looking to your future as an artist, dancer, gameplayer, beekeeper or anything really, it’s important to manage your time and money well. Continuing to dream without action will not get you anywhere. And wanting to someday retire to pursue yet another dream means you owe it to your future self to pay for your retirement, as well as for your current needs.