With all the paperwork and administrative duties that come with being self-employed, retirement easily can get pushed to the bottom of a to-do list. But being the boss comes with a responsibility to help the worker (ahem ... that's you, yourself) financially prepare for retirement.
"There are lots of options, and it can make your head spin," said certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth. "But which option you choose is really just a reflection of your cash flow."
Of the roughly 10 million self-employed Americans, about 55 percent of them say they are behind with retirement savings, according to a recent TD Ameritrade survey. Baby boomers — some of whom are already in their 60s — are an average $335,000 shy of their retirement savings goal.
Whether self-employed or not, the earlier workers start saving, the better. But the long-term results of starting early are magnified for the self-employed because if they can afford to, they can sock away as much as tens of thousands of dollars or more — every year — to save for retirement.
But for many self-employed people, especially those just starting out, setting aside just a few thousand dollars each year in an individual retirement account is more realistic.
"That's the simplest way to save if you can't contribute a lot," said Cindy Turkington, a CFP with Fair Trust Financial.
While relatively simple to set up and administer, both traditional IRAs and Roth IRAs come with limitations.
For 2015 and 2016, the contribution limit is $5,500. If you are older than 50, you can contribute $6,500. You have up until April 15 every year to make IRA contributions for the prior tax year.
For a traditional IRA, your contributions as a self-employed person are fully deductible as long as you don't have a spouse who is covered by a workplace retirement plan. And for those just getting your business off the ground, be aware that your contribution cannot exceed your gross income.
While contributions to a Roth are not tax-deductible, distributions are tax-free once you reach the required minimum age of 59½ for making IRA withdrawals. By contrast, distributions from a traditional IRA are taxed.
But if your income exceeds $131,000, you cannot contribute to a Roth IRA. That's when either a SEP IRA or Simple IRA might make sense. Basically, they are both an IRA set up by the employer (you) for the employee (also you).
A SEP IRA comes with a contribution limit equal to 25 percent of your income, up to a maximum of $53,000.
Cheng of Blue Ocean Global Wealth pointed out that in addition to a SEP IRA allowing you to save more than an IRA does, contributions to a SEP can be made as late as the due date (including extensions) of your income-tax return for that year.
"If you need an extra two weeks or a month to make your contributions, you can file for a [tax] extension … and contribute to a SEP IRA beyond April 15," she explained.
Also, as with other IRAs, you aren't required to make annual contributions, which gives you flexibility if your income is unpredictable.
Cheng also pointed out that if you have a SEP IRA, you could still fully fund a Roth IRA (as long as you meet the income test).
A Simple IRA comes with flexibility, too. The IRS lets you put all of your net earnings — a number reached by using an IRS formula — in a Simple IRA up to $12,500 in 2015 and 2016, plus an "employer" match of up to 3 percent of income. People age 50 or older can put away up to $15,500.
Also available to the self-employed are solo 401(k) plans. As with the Simple IRA, you can contribute to the 401(k) as both the employee and the employer.
The employee pretax contribution limit for 2015 and 2016 for any 401(k) is $16,000. People age 50 and older can contribute $24,000.
In your role as employer, you can make a matching contribution. And if you are married, your spouse can work for you and participate in your plan.
Even defined benefit plans, usually associated with big companies that still offer pension plans, are available to self-employed people. But because of their complexity, they typically are best suited for people who are at least 50 and are playing catch-up for retirement savings or for higher earners.
"Administratively, it's the most complex to set up," said Turkington at Fair Trust Financial. "This is ideal for people in the highest tax bracket who want to lower their taxable income. It's worth it to them."
The maximum annual benefit for such a plan stands at $215,000. Contributions are calculated by an actuary and are based on the benefit you set and several other factors, like age and income.
One thing to remember, though, is that a defined benefit plan isn't for someone whose income tends to be volatile.
"It has a required annual contribution, so if you don't know that you'll have consistent earnings every year, it won't work," said Keith Schnelle, a CFP and owner of Solutia Global.
Advisors also say that for some self-employed people, it makes sense to fund both a 401(k) and a defined benefit plan. In some cases, people can end up saving more than $100,000 a year by doing that.
"But to put that kind of money away, you need to have all your other bases covered," he said. "So the floor is kind of $250,000 or $300,000 in annual income [not revenue] to put in those kinds of amounts."
Regardless of income, advisors say the self-employed should explore their options. Unlike many companies that are automatically enrolling employees in 401(k) plans, no one is pushing independent workers to save for their golden years.
"It's worth it to take the time to plan," Cheng said. "Just make sure you get your advice from a tax advisor and a financial planner."
— By Sarah O'Brien, special to CNBC.com