How to Plan for Retirement When You Work for Yourself
When you work for a company they often times have a retirement plan that you can put money into for when you retire. However, not everyone works for one of those companies. Some people own their own business, so they work for themselves, they are their own boss. So what do those people do to get ready for retirement? There are some things that you can do to get you ready for retirement when you work for yourself.
One of the first things you should do is to get an IRA or an Individual Retirement Account. You have your choice of a traditional IRA or a Roth IRA. Keep in mind though that a traditional IRA is limited when it comes to contributions. You will have a low yearly contribution limits which means that you might not be able to save as much for retirement that you want to. For business owners there are other options that will allow you to put more money aside for retirement. The best thing you can do for yourself would be to get a financial advisor to help you understand the different types of IRAs that you can get and to decide which one will be best for you.
If you are self-employed and have no employees other than your spouse you have the option of opening a solo 401(k) with or without a Roth option. The biggest advantage to having this solo 401(k) is that you can make bigger contributions to it. Being as you work for yourself you can contribute to your solo 401(k) from the employee side and the employer side. This can add up and really help you to save for retirement.
When you are self-employed you must make sure that you are consistently contributing to you retirement plan whatever it is. It can be easy to forget to contribute to it because as the boss and employee you can get really busy, so you must remember to contribute to it. This is something that you just cannot forget if you want to retire comfortably. By neglecting to contribute to your retirement plan you run the risk of not being able to retire when you want to because you do not have enough money to do so. This can be rather frustrating, and exhausting. The best thing to do is make sure you are consistently contributing to your retirement plan.
There are many ways that someone who is self-employed can save up for retirement. It can be much easier than you think. However, if you are unsure of how you want to start saving you can always get a financial advisor to help you understand the different options and to choose the one that is best for you. Everyone’s situation is different, there is no one type of retirement plan that is right for all self-employed individuals. You have to take the time to find out what option is best for you so that you can have the best and most comfortable retirement possible.