5 Retirement Planning Tips for the Self-Employed

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Today’s post is written by guest writer Claire Adams.

Whether you’ve been running your own business for a while or have just become self-employed, you need to face numerous challenges on this entrepreneurial journey. Ensuring a stable financial future is one of the biggest concerns for the self-employed, especially for work-at-home moms and dads who have a ton of other expected and unexpected expenses. However, with the right approach, you can come up with a solid retirement plan that will enable you to spend your golden years in prosperity. Here are the top five retirement planning tips that will help you prepare for the future.

Assess your financial situation

Before imagining yourself spending your golden years on the coast of a dreamy island, you need to take a realistic look at your current financial situation. You should assess your accounts, consider all of your expenses and see how much money you can allocate to your retirement savings account. Once you’ve evaluated your financial situation, you can set specific goals that will help you increase your retirement savings. In addition, don’t forget to take other financial factors into account, such as emergency funds and fallback reserves that will help you deal with unpredictable situations and provide you with a safety net during your retirement.

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Think about your ideal retirement

One of the first things to consider when planning your retirement is where you would like to spend your golden years. This will greatly influence your retirement plan and the allocation of finances. You and your partner will need to decide whether you’d like to live with your family, buy a house nearby or move to a retirement community with their own affordable retirement house plans and numerous amenities. You should simply imagine your ideal retirement and what would make you happy. Once you’ve made this decision, you can take different steps that will help you attain your ideal retirement. If you decide to move to a retirement community, you should take some time to research your options and find a plan that works for you.

Pick the right retirement plan

Self-employed entrepreneurs have a range of different options when it comes to pension plans. You need to browse through different offers and pick one that will meet your financial needs and enable you to have your dream retirement. Possible solutions include a solo 401(k) retirement plan that can cover both you and your spouse, a simplified employee pension plan with a low start-up cost and a great level of contribution flexibility, and simple IRAs for small business owners. All of these options have their own advantages and disadvantages, so it’s advisable that you compare and evaluate them to find the right retirement plan for you. Some of these will also cover your employees, which is another factor to keep in mind. You can always schedule an appointment with a financial planner who can suggest the appropriate financial strategy.

Budget and boost your savings

As a self-employed individual, you probably have a fluctuating income, which can make saving for the retirement more difficult, especially when paired up with unpredictable and children-related expenses. Therefore, it’s important that you start budgeting and making contributions to your retirement savings. Every now and then, you may face a month or two of limited or low profit. On these occasions, it’s still important that you contribute at least some money to your savings. You can compensate during months when your business is booming. You can also consider different ways to cut unnecessary costs or boost your income through investment.

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Automate your savings

As already mentioned, it’s important to keep contributing to your retirement savings. An effective way to achieve this is automating your contributions and setting up an automatic deduction from your account. Since you’ve evaluated your financial situation, you can decide on the minimum contribution amount per month. This way, you’ll remain consistent and diligent in saving for your retirement.

Saving for the retirement is one of the common concerns for the self-employed. However, with a solid and consistent plan, you’ll spend your golden years in happiness, well-being and prosperity.

Meet Claire

Claire is a personal and professional development expert who believes that a positive attitude is one of the keys to success. You can find her online writing and giving tips about lifestyle and development as a regular contributor at highstylife.com.