Self-Employed? Don’t Forget to Plan for Retirement
When you’re starting a business, whether you intend to scale up and hire others, or whether you plan to stick it out as a solopreneur, one of the most important things you can do is plan for retirement. It’s easy to put it off because there are plenty of other concerns on your plate as you work to make your business successful.
However, if you want a secure financial future, you need to make some room to plan for retirement.
What are Your Retirement Needs?
Even though we talk about “retirement” as if it’s some monolithic thing, the truth is that your retirement might look different to someone else’s. In reality, we’re mostly talking about what you want your life to look like once you get past age 55 or so since so many of us aren’t interested in a “traditional” view of retirement. Many of us want to remain active, and probably even keep working on our businesses. I know I don’t intend to stop writing just because I reach “retirement age.”
No matter how you look at retirement, the reality is that you need a plan. First, figure out your retirement needs. What will your life look like when you’re older? Do you want to travel? Do you plan to keep earning money with your business? Will you start a new business? How much money will it take each month to meet your needs?
Sit down and work out what you will need. This will give you a starting point as you plan for retirement.
Contribute Money to a Retirement Account Each Month
Once you know how much you will need for retirement, it’s time for you to start setting money aside. As a business owner, you aren’t going to be able to take advantage of someone else’s plan (and potential match). You need to set up your own retirement account. You can do this in a way that allows everyone in your company to get the benefit, or you can just worry about your own retirement. There are a number of retirement plan options when you are self-employed, so there is likely to be something that will fit well for your situation.
It’s important to set up your plan and set aside money as soon as possible. That way, you have the ability to take advantage of tax benefits and compounding interest for as long as possible. Even if you don’t want to use tax-advantaged plans, you can still plan for retirement by setting money aside and watching it grow. The important thing is to be ready to build up your wealth, even as you work on your business.
One of the reasons many of us are entrepreneurs and solopreneurs is because we want freedom and flexibility. Investing as part of your retirement plan is an important aspect of building that security, freedom, and flexibility for the long haul.