Many young individuals these days are choosing the entrepreneurial path in their early twenties. Rather than jumping into the corporate world, many people in their 20s — whether they are college graduated or not — are starting their own businesses. From creating apps to opening their own photography studios, the new frontier of professionals are emerging.
While small business owners are the backbone of America, there are both pros and cons to working for yourself. One of the cons is: how do you fund your retirement? And that’s an important question. How can young entrepreneurs be proactive in their retirement planning while not taking a financial hit to their business?
No matter the age, it’s unfortunately the norm for many entrepreneurs and small business owners to use their business as their retirement. While this may seem intuitive, it is not the most lucrative, and is also risky.
Listed in an article from Forbes are some shocking statistics. Small business owners age 18 to 64 have saved less than $100,000 for retirement. Older small business owners, age 45-64, aren’t fully prepared financially for retirement.
Operating your own business is a large, time-consuming task, so it’s understandable how retirement planning can get swept under the rug. But that doesn’t mean it’s something to forget about. Even though young entrepreneurs aren’t being offered a matching contribution retirement plan, like many employees of corporate companies are, that shouldn’t discourage them from beginning to save. There are many options for small business owners to take to save and invest in their future. If you’re a young small business owner, continue reading this blog to learn some helpful tips for retirement planning.
Retirement Planning Tips For Small Business Owners
Calculate How Much Money You’ll Need To Live On During Retirement
As a small business owner, you most likely have high hopes for your company. It’s your baby and you’ve invested time, energy, and money into it, so you’re hoping for the best. While a positive attitude is always the best option, there is always the option that it might not take off the way you initially planned. You might have a slow start or a personal issue may come in the way of your strategy. These things aren’t planned, so it’s essential to be safe rather than sorry.
Before or shortly after you begin your business, take some time to think about your retirement plan. Work the numbers to calculate how much you’ll need to live comfortably on during your retirement years. Figure out all your expected expenses in case your business doesn’t pick up as fast as you were hoping. This is a good place to start to gage how much you should save monthly or yearly for your retirement fund. If you don’t know where or how to start the process, you can find retirement worksheets/calculators online to help streamline the process.
Find A Retirement Plan For Small Businesses To Purchase
Did you know that there are firms that sell retirement plans to small business owners? This could definitely be an option for you. There are four retirement plan options available for small business owners: SEP-IRA, Simple IRA, 401K, and Simple 401K. Keep your eyes peeled on our blog section to for a future blog about these four options. Feel free to contact Kennedy Wealth Management, too, if you need help figuring out which plan is ideal for you, your business, and your financial goals.
Hire A Financial Advisor From Kennedy Wealth Management
If you’re young and are just getting started forming your business, there are many benefits of hiring a financial advisor to assist with a variety of things, including retirement planning. They will provide you with the knowledge, expertise, and advice that you may need to constructively build your business in your best financial interest. A financial advisor can assist with cost savings, provide insight into any future developments you have, and can provide you with invaluable information in regards to your future, family, and retirement. They’ll not only help with your business’ finances, but they can help separate your business finances and your personal finances, which is an important step in constructively planning for retirement.
Talk with a financial advisor about retirement planning. Contact Kennedy Wealth Management today.