Retirement Tips for the Self-Employed

Most working people dream of one day leaving their boss and the office behind for the joy and peace of retirement. Then, they envision, they'll finally be the masters of our own destiny. And the self-employed? Well, one could argue (typically 'one' who works for someone else) that self-employed individuals are already the masters of their destiny. However, even a self-employed person wants to take time off to relax, to enjoy life and, ultimately, to retire. (People often forget that the 'employed' in "self-employed" still means to work.) If you have your own business, here are some tips to help you reach your retirement goal:

  • Make a plan. If you're self-employed, you probably already have some experience with creating plans. A business plan was needed to get you up and running on your own. Well, this plan is actually easier. When do you want to retire? What do you want to do after when you reach it? Remember, a person who works for him- or herself doesn't necessarily have wait until age 65 to retire, or automatically retire at that age if they want to keep on working. Whenever you decide to pack it in, a solid plan now will ensure that you'll be able to do so – on your timetable.
  • Choose a financial advisor. In a large organization, financial decisions are made by the company's management on behalf of their employees. They consult financial professionals when seeking appropriate investment and retirement options to offer as benefits for their workers. As a self-employed individual, it's up to you to get professional guidance. An experienced financial planner can suggest ways to invest the money you receive from your business to secure your financial future.
  • Set up a retirement fund. When you work for yourself, you're the employer. Therefore, the only person available to provide retirement benefits to you is you. A Keogh retirement plan is used by many self-employed individuals. It allows you to contribute tax-deferred money toward your retirement.
  • Contribute the maximum amount allowable to your retirement plan. Read your plan's fine print. Depending on the type of retirement plan you use, the amount that you can contribute per calendar year may be limited. If you can afford it, choose a plan that sets a higher limit on yearly contributions.
  • Open an IRA. You can never have too many retirement accounts. Your local bank or credit union can give you guidance on how to open an IRA account with them. You can choose between a Traditional plan and a Roth IRA. Consult your financial advisor to determine which would be best for you.
  • If you have a spouse, discuss your financial plans and goals. You may own the business, but your spouse may also have a nine-to-five job with an employer-sponsored retirement plan, so you'll both want to consider this in your overall financial roadmap. Bring all of your assets to bear in order to increase the money available to you and your family at retirement. Remember, the retirement goal is one to be shared with your loved ones.

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