A lot of Americans are employed by those organizations which require or offer retirement benefits in the form of a 401(k), 403 (b), or pensions plans.
Employee’s contribution each month is automatically subtracted from his paycheck, and it does not put too much pressure on the pocket of the employee. So when he retires, the contribution collected in the name of pension funds becomes a handsome amount and is paid to him.
Why do you need to save?
Well, for entrepreneurs, things are never steady, payments are according to the project deadlines, and so many of the individuals refrain from saving for retirement. At first, saving for retirement does not look like it is a big deal, but in the long term, this can amount to disastrous results as entrepreneurs get old and are in no position to work more.
New research deduced that almost 34 percent of the small business owners at present have no retirement plans, and around 60 percent of the entrepreneurs have ideas on getting out of the business before hitting their mid-sixties, but they aren’t saving for retirement.
Furthermore, those who have pension or retirement plans are not saving much according to the requirements.
One thinks, what are the factors behind entrepreneurs’ disinterest in retirement? Well, this might sum it up.
– Many entrepreneurs do not make enough profit to save for later. Most of them do not earn much, those who do, pour the funds back into the business to let it grow.
– Some entrepreneurs see retirement as a lazy, lengthy, and complicated process to go through. This perception without knowledge, though it is flawed, discourages many small business owners from taking it seriously
– About 18 percent of the business owners make plans on selling their business when they are in their sixties to have some money in their retirement. However, they forget to conclude how hard it is to find a real buyer in this economy.
– Here this factor should be taken into consideration that many companies almost fail after some time, which can leave the owner without any liquidateable assets.
– Some even do not see retirement as an option.
A small group of entrepreneurs does not see the need to save for retirement. They think that social security will cover up for them if their business plan did not work out as they expected.
Retirement seems like a thing that concerns the people in their 40’s only, but that is not the case. Saving for retirement early can make a person financially secure when he is in his sixties and cannot work anymore for some reason.
Some people need retirement funds for traveling, and others need money for medical expenses and paying off debts.
How to save for retirement while running a business
Although you are running a business and do not have an immediate boss, that doesn’t mean that you shouldn’t worry about saving for retirement. Owning a personal venture means that you need to be more vigilant while saving money for the future. Here are some techniques to help you out
- Know your choices
The first step in saving money for the future is to look at the options. When you don’t work for a company, and have no company pension plan, many investment options can help you out. Some of them are Roth IRA, Traditional IRA, and Solo 401(k).
- Budget Creation is Mandatory
It is not mandatory to put a hefty sum of money for retirement while living life today like a homeless person. So, here comes the budget part, it is said that one must save 15 percent of every paycheck for retirement as it will keep the savings line steady, consistent, and on track.
- Delay drawing from savings!
Don’t pull out the money from the saving funds
A time will come when you’ll need the money because the market is booming or just in case the business isn’t doing good. Whatever happens, don’t take the money out of pension funds. Watch out for your older self.
Don’t be a part of a flock of sheep with no vision and think about your future-self with a more focused approach as you work very hard. The least you could do is think rationally about oldage and save up a bit.