Plain Vanilla Investing for Self-Employed Professionals

Which retirement accounts can self-employed people use?

As a self-employed professional, your primary options are a Solo 401k or a SEP IRA, and anyone can also use a Traditional or Roth IRA subject to income limits. A Solo 401k often lets you contribute in two capacities — as both employee and employer — which can allow substantial annual contributions. Survey your options first, because the right account gives you higher limits and more control than a plain IRA alone.

If you're over 50, factor in catch-up contributions. As of 2026, someone over 50 can add an $8,000 catch-up on top of the standard limit, and those aged 60–63 can add $11,500 instead. Choose Roth where possible so your growth compounds tax-free and you never share that pool with the IRS.

How do you pay yourself first with irregular income?

This is the hardest part for the self-employed, because income arrives in lumps rather than steady paychecks. The rule still holds: the moment income arrives, move a chunk into retirement and savings before you make any discretionary spending decisions. Rather than waiting until year-end and hoping money is left over, contribute the catch-up-eligible maximum from your first strong quarterly payment of the year.

Because you can't always predict your annual total, treat automation as a floor and windfalls as top-ups. Set a baseline automatic transfer you can sustain even in a slow quarter, then add lump sums after a strong quarter or year during your annual review. This keeps the emotion out of the decision — automation removes the failure mode where you talk yourself out of contributing during a quiet stretch.

What do you do with old 401ks from past employers?

Consolidate them. Accounts scattered across many institutions from prior jobs are easy to lose, hard to manage, and difficult for anyone to handle if something happens to you. Roll orphaned old 401ks into a single Roth IRA where appropriate, then verify each one is actually invested in diversified ETFs — not sitting in cash or a single stale bond fund.

Critically, update the beneficiary designations on every account once consolidated. An outdated beneficiary — say, an ex-spouse named a decade ago — overrides your will and cannot be reversed. This is a five-minute task that prevents catastrophic outcomes.

How do you fund near-term goals like tuition or a family event?

Match the vehicle to the time horizon. Retirement accounts penalize early withdrawal before age 59½, so for shorter-term goals — a wedding, a bar/bat mitzvah, a renovation, a car — open a taxable brokerage account and nickname sub-accounts for each goal. A goal 3+ years away can carry market exposure; a goal under six months belongs in a high-yield savings or money market account with no market risk.

Avoid UGMA/UTMA accounts for goals you control. That money legally belongs to the child once they reach the age of majority, and they can spend it however they choose. Keep goals you're funding on their behalf in a parent-owned, nicknamed brokerage account instead.

How do you keep the whole system diversified and calm?

Build your portfolio from plain vanilla ETFs and mutual funds only — US large cap, small and mid cap, international developed, emerging markets, real estate, and bonds. No individual stock picks and no alternatives you can't fully explain; those go in the too-hard pile. If you feel the itch to speculate, confine it to a Cowboy Account of 5% or less. Then turn off notifications and run an annual January review.

Next step: Confirm your Solo 401k or SEP IRA eligibility this quarter, contribute your maximum from your next payment, and schedule a session to consolidate old 401ks and update every beneficiary.