“If my dreams could all come true paradise/retirement would be — in a little bungalow — somewhere by the sea.”
Isn’t that what we all wish for? Retirement is one place where we look for comfort and wish to spend days doing nothing productive. Why one shouldn’t? After all, we have worked all our lives and a comfortable retirement is what we deserve at the least.
However, the dream for a happy retirement is looking somewhat shady for the American Entrepreneurs and Small business owners. According to a survey conducted by TD Ameritrade in 2013, nearly 40% of the self-employed individuals are not regular with their retirement savings whereas 28% have no savings and do not invest in any qualified retirement plans. A large part of this workforce agreed that they had to stop their retirement investments at one point or another because of a business or personal requirement.
What are the beliefs of self-employed professionals?
There is no doubt about the effective intelligence of entrepreneurs; however, they neglect retirement savings because of various reasons. Some of these reasons are listed here:
- Business will provide sufficient savings for their retirement.
- Strong belief that business will keep making sufficient profit and they don’t have to save for future.
- Entrepreneurs invest all their profits back into the business for better growth.
Well, it sounds like a safe haven; however, there is no guarantee about the next paycheck. How would you survive without a regular income stream? That is where retirement options kick in. For an efficient retirement plan, start by preparing a cash flow plan for your retirement and make sure to include all your expenses in the process. This simple yet effective process will help you picture your retirement needs and the kind of income you would require to sustain you current lifestyle. You can choose a retirement plans for self employed individuals accordingly.
3 Retirement Tips for Self-employed Professionals
- Create a systematic approach: One of the key tips is to create a systematic approach for retirement savings. Setup an account with automatic deduction feature and invest this money in a Solo 401(k) towards the end of the year.
- Choose a plan that works for you: It is important to choose a retirement plan that works for you and suits your business requirements. Another important metrics is to evaluate the amount of money that you can contribute towards your retirement and choose a saving option such as Checkbook IRA. Further, you can always catch up with additional investments for retirees and balance overall savings.
- Consistency is crucial in retirement savings: Above everything else, it is important to develop consistency in your retirement savings. Without regular contributions, you won’t be able to reach your target amount and one should never underestimate the power of compounding interest in retirement savings.
Important terms related to self-employed retirement:
- Retirement plan for self employed individuals
- Self employed 401 k
- Self employed pension