Entrepreneurs retirement planning might not ring any bell as much as it should. That is because, like myself, we tend not to work on the far end of our lives. Regardless of what stage of self-employment you may be in, your top priority should be how to make your investments last in retirement.
If you already have a retirement fund in place, then now is the right time to consider how to maximize it. One major way to do this is by using an income investing approach. When you collect cash flow from dividends, stocks and other types of investments, you can create a solid portfolio. It’s important to note that each stage of entrepreneurship comes wit different to do lists when it comes to Entrepreneurs retirement planning. So, here are a few tips that can help keep you on track of your Entrepreneurs retirement planning.
The Early Stages Entrepreneurs retirement planning
The early stage of self-employment can be the most overwhelming. This is even worse when you have left your traditional career in the workforce to start your own business. At this stage, retirement is the least on your priority list. However, there is no better time to start considering Entrepreneurs retirement planning.
Even if you cannot afford to put as much money as you used to, you should still make sure you make your contributions. Forgoing your savings altogether is really not a good idea. Instead, focus on saving what you can. Also, have money automatically withdrawn into your retirement account without flinching. This way, it makes it easier to not look back or reconsider depositing into your retirement fund if you’re doing it all by yourself. Again, it helps with the disciplining.
This means investing in other businesses in your industry. This way your portfolio is diversified and you have assets. Think about an individual 401(k)plan. However, this option exists only If you have no employees. It is also the perfect account in the case where you hope your spouse contributes. In the case where you choose a Roth plan, you can also enjoy free withdrawals once you reach a certain age which is usually helpful when you’re self-employed.
Mid-Stage of Entrepreneurs retirement planning
If you’re in a stage where you have been an entrepreneur for more than 10-15 years, you may have a retirement fund working well already. However, a lot of American entrepreneurs still don’t have retirement accounts at this phase. If you find yourself in this position, consider these tips:
Think of an escape strategy
Are you planning on working forever? Do you hope to sell your business or you intend to pass it on to another family member? These are some of the things you need to consider when looking at retirement options. Indeed, you’ll want to make sure your business is running successfully even when you’re not there. So, in this case, you should be planning a deadline of when you want to stop working. In this instance, it’s best to start reviewing financial implications of your exit.
Review your assets
You should start to take note of your company’s assets and how they can be part of your retirement plan. If you have a lot of liquid assets or everything is tied up in the profits from your business, you should successfully be able to learn how you can turn these into a retirement account.
Max out your contribution limits
Savings are always important. So if there is a possibility of maximizing your retirement account now, then you should. Depending on the type of account you choose, your contribution limits will tell. However, you may need to look into investing some of these savings you’ve already accumulated into your retirement.
If you are married or in a trustworthy relationship, try to make them part of the contribution. This act will increase the result you had be getting as a solo contributor. Like we already know, 2 good heads are better that 1 great head.
Late Stage of Entrepreneurs retirement planning
The late stages can be a very scary one. If you intend to sell your business or pass it along to a family member or friend, the options may be very overwhelming. A lot of times, people think the profits they’ll make from selling their business will be enough throughout their retirement. However, this is not always the case. At this stage, you should have been in a position where you have reduced your personal debts and start calculating how much you’ll be needing for retirement. Consider the following steps:
Spread your investments
While it’s important to invest in your own company, it’s also very important to diversify your investments. That way, it gives your portfolio more overall strength and these liquid assets can turn into a retirement income for both you and the members of your family.
Investments opportunities are growing by the day, with the advent of tech companies offering loans via the internet without collateral. These companies are open to investors without minimum limit to what you can invest. ALAT by Wema bank would allow you invest ordinary One Thousand Naira and still let you earn about 10% annually. There are others like PiggyVest which even has higher interests rates on your investments and let you chose sectors you preferred to invest.
Give yourself time to sell your business
Selling your business does not just happen overnight. In fact, it may require a lot of work on your part. Also, do not wait until retirement before you start looking out for options. Also, increase the amount of money you’re saving towards retirement to 20 percent or more of your income. At this stage, a lot of financial pressures like putting your children through college or paying the mortgage are not an issue anymore.
In conclusion, we can never over emphasize the importance of Entrepreneurs retirement planning. There are so many options to consider, however, it is important we do not mix them up, an early stage plan should not be schedule for late stage. Entrepreneurs retirement planning is the bed rock on which entrepreneurs will rest at the later days of our lives.
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