Tranel Talks Column

Retirement Planning for Self-Employed Individuals

Many individuals are aspiring entrepreneurs these days. A vast number of people are running their own businesses in a variety of fields. Retirement planning for self-employed people is vital. While Social Security is only designed to replace just 40% of your income, having great retirement strategies while operating your own business is important. Let’s examine great tips on how to plan for retirement while operating your own company.

Create a Budget For Success

One of the most significant things that a self-employed person can do within the retirement planning process is to set both a personal as well as a professional budget. As an entrepreneur, cash flow can become uncertain. So, consider setting aside six months of overhead.

When you achieve a nice overhead, you can continue cash contributions into a retirement account. A wealth management advisor is the perfect person to discuss your goals with while helping you with retirement planning.

Plan Your Exit

Given our current times, entrepreneurs are building businesses that help to create sustainable income with little to no overhead. Thanks to your innovative idea that you have turned into a business, you can make profits even in your sleep. So, it may help to view your company as a nest egg rather than just a weekly or bi-weekly paycheck.

Take your profits from your business and then put them back into your business. Pay yourself less today so that you’ll have more valuable business tomorrow. Consider sitting with a reputable financial planning service and ask for help to create a long-term plan for exiting or monetizing your business. Think of your business as a valuable service for years to come as you work on your retirement planning techniques.

Consider Your Business an Asset

As a business owner, you have invested lots of your time, energy, and money into your endeavor. From equipment to classes that you have taken to meet the changing needs of your customers, you work hard. Given all that you have done to create a profitable business, it may help for you to think of your business as a long-term asset.

While devising the best retirement planning strategies, think of your business as not just an income source, but also as a transferable entity so that your business is your largest single asset that is on your financial statement. If you decide to sell it one day, you may be able to enjoy a great stream of income later in life.

Live On a Fixed Income and Start Small

Regardless of the profits that you are making from your business, you want to live below your means. While many financial consultants would advise that you pay yourself first, you want to live as a disciplined entrepreneur. So, consider living on a fixed income. Set a salary that is consistent and stick to it. As you work on your retirement planning, your fixed salary will allow you to set aside money that you can save each month.

Speaking of savings, as a business owner you may also consider starting small. For example, if you tighten that belt and are able to save only $50 a month, then do it. Within six months, you’ll see a savings of $300. Being self-employed is not easy, but it can be rewarding. It also requires discipline and long-term planning. Many wealth management advisors will encourage those who are beginning self-employment to start with that $50. If you cannot place that amount aside, then consider another amount.

When it comes to retirement planning, you are the one who is in charge of your future. These days, business ownership looks a lot different than it has in the past. Instead of in-person meetings, there are video conference calls available. Many Brick and Mortar businesses are now thriving online companies that allow customers to order the products they desire from the comfort of their own homes.

As your Libertyville, IL retirement planning professionals, The Tranel Financial Group is here to assist with all that you want to accomplish with your business once you decide to retire. We also offer estate planning, assistance with wills, and more. Connect with us today, and let’s work to help you live comfortably for all of your tomorrows.