What the Self-Employed Need to Know About Saving for Retirement Saving for retirement is critical for everyone, but when you're self-employed, you have to take the initiative to save up without anyone else's help. Here's what to know about saving and investing for retirement.

When you own a business, you know how much rests on your shoulders. From keeping clients happy to managing vendors and workers, you have a lot to juggle. Nobody else looks out for these and other critical business functions when you're self-employed. That includes something very important to you and your family's financial future: your retirement.

Here's a closer look at what you need to know about saving and investing for retirement when self-employed so you can maintain your ideal lifestyle during your golden years.

Related: How to Save for Retirement While Running a Business

Creating your self-employed retirement plan

The first step in saving for retirement is setting retirement goals. All future retirees should set realistic goals around saving and investing. Looking at the end and working backward helps you know you're making the right decisions today.

One popular retirement plan method is to set a reasonable budget for your post-work years. Keep in mind that some expenses will go down, likely you'll spend less on transportation without a commute and wardrobe for the workplace.

Factor in inflation, medical costs, travel, hobbies, housing and other needs. With that monthly or annual spending plan, you can calculate what you need to retire.

Some retirement advisors suggest that you can withdraw 4% to 5% of your retirement account balance indefinitely and never run out of money. Divide your annual retirement budget by 0.05 to find what you would need to withdraw at the 5% rate. For example, if you want $50,000 per year in retirement, you would need about $1 million in retirement investments.

For every additional $50,000 per year you want, add another million dollars to your retirement savings goal. For $100,000, you would need $2 million invested. For $200,000, you would need $4 million. And so on.

Related: Get the Best Retirement Account(s) for Your Situation

How much to save for retirement

Many financial experts suggest saving at least 10% to 15% of your gross income in a tax-advantaged retirement account. Super savers do more, sometimes saving as much as 50% of their income for the future in pursuit of early retirement.

Using a retirement calculator, you can plug in your current retirement balance, target retirement age, annual income, expected annual investment returns and other factors to estimate what you should save every month to reach your retirement goals.

What about Social Security?

Social Security is an important part of financial planning. Social Security is guaranteed by law, but Congress can always make changes to lower benefits, so it's a good idea to plan on standing on your own financial assets when you stop working.

Benefits are more likely to be what's on the report for those nearing retirement, while those with decades before their 60s may plan on a slightly lower benefit. To get an estimate of your Social Security benefits when retired, you can log into the Social Security website to review your personal report.

Tax-advantaged retirement accounts for business owners

If they're lucky, employees at big companies and organizations have accounts like an employer-sponsored 401(k), 403(b), 457, or even a pension plan. Business owners have to create their own retirement accounts. Here are two of the most popular options in the U.S. for small businesses in addition to traditional and Roth IRA accounts, which are available to almost anyone in the U.S., though some income limits apply.

Related: Best Retirement Plans – Broken Down By Rankings

SEP IRA

SEP IRA accounts, short for Self Employed Pension Plan Individual Retirement Account, are flexible accounts for business owners and employees. You can set this up for free at most large brokerages on your own and pick from any supported investment.

While you can make lumpy contributions without a specific schedule, there are contribution limits that may not be ideal for many business owners. Funds work much like a traditional IRA or 401(k), where contributions are made pre-tax, and withdrawals are taxed at your regular income tax rate, which should be lower when you stop working.

Solo 401(k)/small business 401(k)

The Solo 401(k) takes more paperwork to create and requires adhering to more rigid rules around contributions. If you work alone, you can likely get a Solo 401(k) account free from a major brokerage. Those with employees may have to choose an option specifically made for small businesses for an additional fee.

Depending on how you proceed, you may have the option of access to all available investments from a major brokerage, a specific family of mutual funds or ETFs, or a specific menu of available funds. Try your best to keep fees as low as possible while maximizing investment access.

Related: Which Retirement Plan is Best for your Small Business?

Don't wait until it's too late

While it's never too late to start saving for retirement, it's much easier to hit your goals when you start saving early. Thanks to the power of compounding, saving even a little early on can lead to huge returns over many years of investing.

Retirement may be a long way off, but it will sneak up on you faster than you realize. When you stay focused on your retirement goals and automate your investment strategy, you're in the best position to achieve that dream retirement.

Whether you want to spend your days on the golf course, painting, or napping on the beach, anything may be possible. With a good retirement plan and solid follow-through, there's nothing holding you back from hitting those retirement dreams.