Solo 401(k) Strategy Shelters Consulting Income for Retirees

A financial strategy for retirees earning approximately $30,000 in annual consulting income utilizes a Solo 401(k) to shelter the majority of earnings from taxes. For 2026, the plan leverages an employee deferral limit of $24,500 and an $8,000 catch-up contribution for those aged 65, enabling investors to place nearly all net self-employment income into pretax investments.

The strategy employs a growth-tilted portfolio distributed across three specific exchange-traded funds. It uses the Vanguard Mega Cap Growth ETF for large U.S. company exposure, the Avantis U.S. Small Cap Value ETF for smaller profitable companies, and the iShares Core MSCI Emerging Markets ETF for international diversification.

Designed for investors with a 20-year time horizon, the approach aims for long-term accumulation but carries inherent risks. These include significant concentration in mega-cap stocks and general market volatility.