If You Work in Retirement, Can You Save in a Retirement Plan?
Yes! Well, probably. If you meet the requirements, there are multiple retirement plans you can choose from.


If you’re like many affluent retirees, you don’t retire cold turkey. Perhaps you consult for your former employer or the industry you worked in. Maybe you do something else altogether, to keep engaged. Regardless, if you earn self-employment income, you are likely eligible to save funds that you don’t need day-to-day.
Let’s say real estate is your passion. So, after you turn in your keys, you take the real estate salesperson exam. In your first year, you do a deal with a friend, but your marketing and licensing costs are higher than your income. You cannot save into a retirement plan because you didn’t actually have income. From an IRS perspective, these plans will always be based on your net income/profit. If you are reporting income on a Schedule C (sole proprietor), you need line 31 to be positive.
If line 31 is positive, here are ways to save:
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Traditional IRA. If you’re at this point in your career, you likely already have a traditional IRA. Thanks to the SECURE Act, there is no longer an age limit for putting money into these accounts. They make sense if you want the simplest solution for a small deduction. In 2023, the IRA contribution limit is $6,500 for those under age 50, and $7,500 for age 50-plus.
SEP IRA. This used to be the go-to plan for my firm if you were a sole proprietor looking for higher contribution limits. The plans were and are simple to set up and fund. The custodians we use don’t charge for account administration or any differently than they would for a traditional IRA. In 2023, you are allowed to contribute the lesser of 25% of compensation or $66,000. The calculation is not as straightforward as it sounds, and I’d recommend getting professional advice before making a contribution.
It's important to note that if you add employees, the SEP IRA will probably not make sense. The plan requires you to commit an equal percentage to each eligible employee’s plan. You are considered an employee. E.g., you max your plan at 25% of compensation and have one employee. You also have to put 25% of their compensation into the plan. Great for the employee. Probably less so for you.
Solo 401(k). This is now my go-to plan for the solopreneur. The cost of these plans has significantly decreased in the last decade. At this point, the custodians my firm uses don’t charge account fees for solo 401(k)’s.
What made the solo 401(k) replace the SEP IRA as the default? Higher contribution limits in most cases. The rules allow you to contribute up to the 401(k) limits as an employee plus 25% of net self-employment compensation. The total limit of annual contributions is $66,000 if you’re under 50 and $73,500 for 50 and over. To oversimplify, this allows you to add an employee 401(k) contribution to the SEP IRA formula.
Defined benefit plans. These are an entire category of retirement plans whose businesses have taken off and are in search of even higher contribution limits. If this sounds familiar, it’s because defined benefit plans are pension plans. They attempt to define the benefit you will receive in retirement, not define the contribution you will make today, like all of the previous plans discussed.
There are many different flavors of defined benefit plans, and they are all more complex to set up and administer than their defined contribution counterparts. However, for a highly profitable business looking to defer its tax liability into future, hopefully lower, tax years, they can make a big impact.
It’s not uncommon to fund these plans with a few hundred thousand dollars per year over the course of about five years. Because you are typically locked into the amount and time frame, you want to make sure that your cash flows are steady or increasing and that you’re not planning to step away from the business in the coming years.
Whether or not these plans fit into your plan is a bigger question. While the tax deduction is nice today, you want to make sure you’re not shooting yourself in the foot in later years when the money comes out. That said, they are a great tool if you’re sick of getting letters from Medicare increasing your premiums.
related content
- Leaving Retirement? Three Things to Consider Before You Unretire
- A Medicare Surcharge That Might Surprise You If You’re Not Careful – IRMAA
- Want to Do Board Service? Start the Search Before You Retire
- Volunteering and Donating Can Deliver Feel-Good and Tax Benefits
- To Create a Happy Retirement, Start With the Three Ps
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
-
The Most Popular Apps for Retirement Planning in 2025
A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary Forms
Standard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary Forms
Standard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams Now
Beyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
While some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for Retirement
Saving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial Expert
Health care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?
Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest Rates
As speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial Professional
Winning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.