Let me start by saying that I love the 401(k) plan. It’s the single best wealth accumulation vehicle available to the vast majority of Americans. At today’s contribution limits, you can defer $18,000 of income — and $24,000 if you’re 50 or older — tax free.

That’s great for middle-class Americans, and many can meet those goals with a little bit of discipline. But if you have an annual income of $500,000 or more, that amounts to a paltry savings rate of less than 4%. Any savings above that amount would be subject to punishingly high taxes…and even the dreaded ObamaCare surcharge.

Well, I have good news. If you earn a high income and own your own business (or are paid as a 1099 contractor), you have vastly superior savings options at your disposal. If done right, you can save well over $100,000 per year in tax-sheltered accounts.

This strategy is designed for the self-employed, but it can also work if you work for a paycheck but also earn additional income from a side business or additional contract income. A lot of doctors and consultants would fall under this umbrella.

We all know that the traditional defined benefit pension is dead. The days when your employer guaranteed you an income for life are now something we read about in history books.

Well, that might be true for corporate plans. But there is nothing stopping you from starting your pension for yourself and your spouse.

The One-Man Pension

The best retirement savings strategy is actually a combination of two separate vehicles:

I’ll tackle the Individual (“Solo”) 401(k) plan first. Most investors consider a Solo 401(k) plan to be more or less interchangeable with a SEP IRA.

They’re wrong.

While both plans max out at $53,000 per year in contributions, the Solo 401(k) allows for front loading. I’ll explain with an example. Let’s say your business earns $100,000. With an SEP IRA, you can contribute 20%, or $20,000. This is a profit sharing contribution made on your behalf by your employer…which happens to be you.