Make no mistake about it -- if you work for yourself, no one else is going to take care of your retirement for you. So how do you make it happen?
Step 0: Get Your Other Expenses in Order
You need to save for retirement, but before you start doing that, there are other concerns. First and foremost, you should not be saving for retirement at the expense of paying down high-interest debt, such as credit card debt. On the other hand, you should worry less about paying down student loans, assuming they have very low interest rates.
Step 1: Set Up Your Business
As sad as it might sound, you can't get any of the tax benefits of a Solo 401k (also known as a Uni-K or a Solo-K) unless you're incorporated. This is true even if you're a sole proprietor. But don't worry: There are a number of great tax benefits to incorporation, so you really need to do it anyway.
Step 2: Select Between Roth and Traditional Instruments
"What's the difference between a Roth and a Traditional?" That might be the most common question going when it comes to retirement. The short answer is that Roths allow you to pay taxes when you put the money in, while Traditionals let you pay taxes when the money comes out. If you're going to retire in a higher tax bracket than the one you currently occupy, opt for the Roth.
Step 3: Know Your Limits
As with most tax-deferred investment schemes, there are limits on how much you can throw into a Solo-K and still reap the benefits. For 2016, there's a strict limit of $18,000 for everyone under the age of 50; for those over the age of 50, the limit is $24,000. However, note that this is only on earned income: For anything else it becomes a little more complicated. Talk to your financial advisor.
Step 4: Don't Trust Autopilot
The thing is this: Autopilot might be great or it might be terrible. You won't know unless you poke around in it a little bit. The default settings are pretty "one size fits most," but what if you're not one of the most? What's more, everyone has different investment goals. Do you want to retire old with a ton of money or young with less? You need to have these goals in mind when looking at what's actually in a Solo-K.
Step 5: Diversify
This is really just a part of step four: You want to have a diverse portfolio in the Solo-k. Really, this is Investing 101, but if you're starting from square one, you need to be told. What the precise balance should be depends again on what your investment goals are, as well as your overall risk tolerance. Want to get started? Check out FutureAdvisor's recommendations.