Pre-tax retirement options for self-employed individuals?

[Geila]

The current convo about retirement got me thinking...

I've been doing some contract work and while the hourly wage is very fair for the work I'm doing, I'm bummed to see so much of it go to taxes from being self-employed. Since the bulk, if not all, of this money is being set aside for retirement, I'm wondering if I should set up some type of pre-tax retirement vehicle for myself as a self-employed individual/small business owner (I do have a business license). So far I've just been doing the Roth IRA maximum and putting the rest in after-tax investments earmarked for retirement.

Has anyone set up their own pre-tax retirement account as a self-employed individual? Pros, cons, things you would do differently?

[cindycindy]

My DH has always been self employed. Set up a SEP many years ago. All contributions are deducted from annual net income. There is a limit depending on income on the amount that can be contributed. No paperwork to set up. This is pretty much his retirement "plan" (ie no pension from previous jobs, etc.)

[iris lilies]

DH has had a SEP snce 2001 when he went solo. You need to take that seriously. I dont know the downside, but the upside is pre-tax money working dor you.

[Geila]

Thanks guys.

I looked up the small business Vanguard options here: https://investor.vanguard.com/what-we-offer/small-business/compare-plans?Link=facet
and I think that the Vanguard Individual 401k plan might be the best fit for me because it allows a much greater portion of assets to be invested. As a sole proprietor, you can contribute both as an employer and as an employee. It also allows Roth contributions, whereas it seems the SEP plan does not, although I did not verify that. I think the additional paperwork and maintenance of the account would be worth the extra investment potential.

I'm going to see how the first part of the year pans out income wise before I decide and open the account; since the work is contract, I can't project earnings.