How to Plan for Retirement When You’re Self-Employed
If you're self-employed, retirement planning may not be at the top of your list of priorities. After all, you're probably busy running your business and don't have a lot of extra time to think about the future.
However, retirement planning is important for everyone, and it's especially important for those who are self-employed. Here are a few things to keep in mind as you start planning for retirement.
1. Savings
First, remember that you'll need to save more money than those who are employed by someone else. That's because you won't have an employer-sponsored retirement plan like a 401(k) or pension. You'll need to set aside enough money to cover all of your expenses in retirement, including healthcare.
Begin by estimating how much money you'll need to cover your expenses in retirement. Then, start setting aside money each month into a retirement account. If you're not sure where to start, there are plenty of resources available online or through financial advisers. The most important thing is to get started and make retirement planning a priority.
2. Retirement income
Second, consider how you'll generate income in retirement. If you plan to sell your business, make sure you have a solid exit strategy in place. If you plan to continue working, think about how you'll reduce your workload as you get older.
If you plan to continue working, think about how you'll reduce your workload as you get older. This may involve hiring additional staff or delegating more responsibility to your employees. By planning ahead, you can ensure that you'll have a comfortable retirement despite being self-employed.
3. Taxes
Finally, don't forget to factor in the impact of taxes on your retirement income. When you're self-employed, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This can add up to a significant amount of money, so it's important to factor this into your retirement planning. With a little careful planning, you can ensure that you have enough money to live comfortably in retirement, even after taxes.
As a self-employed individual, it’s important to plan for retirement just like everyone else. You have unique considerations to think about, but the Confident CFO can help you make sure your plans are on track.
Not quite ready to take the leap into hiring a bookkeeper for your business, but you don’t know how to do it all yourself? Become your own CFO with the Confident CFO membership!