Owning a small business has always been appealing to people because it offers the individual owner a degree of personal independence and the freedom to direct their business as it grows. The feeling of creating a successful business that leaves a mark simply cannot be measured. With this freedom, however, comes unique responsibilities, as entrepreneurs will find themselves taking responsibility for their own finances in a way that non-business owners do not need to, namely properly planning out their retirement finances.
Planning for your retirement when self-employed
Planning inadequately for retirement is a major mistake that many entrepreneurs make. Regardless of the age of the business owner, fears about finances both current and future may severely hamper any savings plan. This could lead to a business owner finding themselves in a predicament when the time comes to retire, either finding themselves short of funds and forced to supplement their meager savings or deferring retirement indefinitely in order to continue producing income.
Successful retirement plans should begin with the start-up of the business and be factored in along the way. For a self-employed business owner, considering options for saving and finding the best route means doing some homework. There are a variety of routes that one can take to save for retirement, many of which are very generous in their tax-saving features.
Begin by learning as much as possible about investment and finance, particularly as it pertains to retirement savings. The current instability in the economy means that a certain degree of flexibility may be needed. In addition, seek out advice and guidance from reliable sources such as the Gallagher Group; more complete knowledge equals better investments equals a better retirement in the long run.
Beginning early to save for retirement is important for two reasons: first, a longer span of time before retirement means a longer period of time in which to be saving money; second, a longer span of time allows for changes to be made to the structure of the retirement investments, depending on the success of the business as well as the economy and stock market.
When it comes to investing, there are a wide range of choices to explore. Remember to spread the savings around, diversifying into stocks, funds, real estate, as well as investing in the business itself. Establish a yearly contribution goal, at least 10% of the net yearly income, to be saved. Individual business owners without employees may want to explore the SEP-IRA. This type of IRA is a simplified employee pension, and the investor may contribute up to 15% of their yearly self-employment income. Another option is the Solo 401(k), which allows for sizable contributions up to $50,000 per year for a business owner and spouse.
Taking charge of your retirement
While it may seem intimidating to begin saving while the economy is still experiencing the recession hangover, it is actually the best of times to start building a retirement nest egg. With thorough research and sound advice, any entrepreneur can wisely and confidently invest for their future in a wide variety of ways, putting the gold in their golden years as they watch their own business grow.