If you’re like me, you may have found your 9 to 5 job a way to pay the bills and secure your future and not much more. I disliked my job, and every Sunday night, my stomach would churn as I thought about facing another week at work. To make matters worse, because of the stress from my job, I often made poor decisions regarding food intake and exercise, so my health also suffered.
When I was able to, I took the leap to self-employment. I definitely don’t regret quitting my job. I’m much more relaxed, I enjoy life more, and I sleep better at night. Best of all, I no longer dread Monday morning, I’ve lost a lot of weight, and my health is better than before.
However, there are some perks I miss from my old job, namely retirement savings. My employer matched my retirement savings, which was a pretty sweet deal. Now, any retirement savings I do is done by me and me alone.
As entrepreneurs and self-employed individuals, we have to save for our own retirement and make it a priority.
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Setting Up Your Retirement Goals
If you’re newly self-employed, you may want to talk to a financial advisor to see what options are available to you. It’s also good to determine your retirement goals.
- How much money would you like to have at retirement?
- How much money do you have to set aside each month to reach this goal?
- How long do you plan to work before you retire?
- What type of retirement would you like to have?
Don’t Forget Your Retirement from Your Former Employer
Don’t forget about your retirement from your former employer. You’ll likely want to roll that retirement account into your own privately held retirement account. Again, an advisor can help you with this, but as long as you do a direct rollover to your private retirement account, you won’t incur any penalties or fees and the money will be under your control, not your former employer’s.
The Accounts That May Be Available to You
As a self-employed individual, there are a variety of financial planning and retirement investing vehicles that may be available to you. To name just a few, you could consider SMSFs, Roth IRAs, and SEPs.
Your advisor will work with you on the best investment considering your income and tax liability, among other factors. Your advisor can also help you find the best SMSF administration and investments to fund your retirement accounts.
In the hustle and bustle of starting your business and making it profitable, it’s easy to forget about things your former employer may have handled such as your retirement account. However, now that you’re self-employed, there is no one to do it for you. You must set up your retirement account yourself (with help from an advisor) and make contributing a priority.
While self-employment has many advantages, losing out on the employer match for retirement is a downfall. However, with a careful plan, you can enjoy self-employment and financial freedom as you approach retirement age.
What do you think is the best way for the self-employed to save for retirement?
About Carson Derrow
