This last week, we lost some tulips (thank you, hail) and enjoyed some track meets (thank you, sunshine), and now we’re back to talk about retirement, specifically for entrepreneurs. More and more people are joining the ranks of entrepreneurs these days. Technology and even crowdfunding is making it easier for anyone to launch a product or business these days. It’s also easier than ever to participate in a side gig which we love! BUT sometimes, entrepreneurs forget to save for retirement because they’re plowing all accessible funds into their business.
Investing in your business is an important growth strategy, but we there are 5 things to consider when thinking about retirement as an entrepreneur.
1. Cast a Shared Vision
Entrepreneurs LOVE a good vision statement. Do you have one for your financial future? Start right now to consider your “future funding plans”. The word “retirement” puts some people off, so we like to think terms of a “future spending plan”. Dreaming about where we’ll be, what we’ll be doing, and what God is calling us to. This vision motivates us.
We’re both primary Spenders, which makes it even more difficult to take our money and put it far away, into the future. (Don’t know your Primary Money Personality, take our free, online MPA to find out.) We discuss our future plans a lot. If you and your spouse don’t know what the plan is, have fun! Brainstorm. Dream. Discuss it over time or on date nights. Make it fun! It’s exciting to plan for the future, enjoy it.
We have decided in one of our “retirement” years, we want to each pick two places to live, for about two months. For example, Scott fell in love with Italy, and one of his picks is Rome. His other? Downtown Manhattan, to truly experience New York, from the food, to taking a morning run in Central Park. That’s one thing that makes putting away money for the future more exciting.
2. Explore Your Options
There are plenty of choices when looking for ways to invest for retirement. You can establish a Single-401(k) for your company and enjoy the tax advantages and retention benefit. No need to be a huge company to start one. Plan Advisor found 40% of people surveyed would leave a job without a 401(k) for one that had one.
There is also a SEP, which is a simplified employee pension. It is a benefit for the owner, which we’re assuming that may be you, so it’s worth the look. Here’s how to set one up.
You can also look into Roth IRAs. One of the easiest ways to put funds in these plans is to set up auto withdrawal from your paycheck. Set it and forget it. Ours is a quarterly withdrawal from our account which works better for us than monthly or weekly. Just don’t fall into the common trap where entrepreneurs forget to save for retirement.
3. Tax Planning
Uncle Sam and we want to remind you to stay on top of your taxes. If your business expenses and income are at all tricky, you may want to talk to a trusted advisor and not attempt filing for yourself.
Advisors can make it easier to plan out the future. They are a neutral party with specialized knowledge. And often worth the expense. They can help you determine how the money will be taken out – pre or post-retirement. It’s important to know the benefits of each. How much will your company contribute.
Let’s be honest, those of us who never want to retire will still have to slow down at some people. When thinking about retirement planning break it down into manageable sections: 1 year, 2 years, 5 years, 10 years, and pick your final year.
In today’s society, people are living longer, so saving sooner will help in the later years. If you live to 65 you have a greater chance of living to 85 than you did to live to 65.
Longevity is becoming the norm. Just last Saturday, Scott’s grandma turned 97!
4. Add a Side Gig or Freelance
You may feel too strapped to set aside money from your start-up business for retirement. When you’ve trimmed every expense you possibly can sometimes you need to add to the other side of the equation and find a way to bring in more income. A common solution today is a “side gig” or “side hustle”. If you can get that going you can put all the funds for that into your future savings, and use those extra funds to support later years.
Common side gigs are driving for Uber or Lyft, consulting, freelance, or being a pet sitter or dog walker. These little jobs can really provide peace of mind, adding little bits to retirement funds.
There are an estimated 25 million entrepreneurs in the U.S.A.. That means 1 out of 10 Americans are entrepreneurs. 57% of all Americans are currently exploring entrepreneurial opportunities and they say women are more likely to start an innovative small business to solve a problem.
So find your passion, solve a problem, start a side gig.
5. Insist on Teamwork
No matter how you go about saving for your future, it is so important to make sure you’re headed there together. Keep your relationship interesting by exploring new interests, learning together, and sharing your dreams.
Remember to focus on how thrilling it is to consider the future together, instead of getting lost in the details of every day. Kids, life, moving, work, all sorts of busy things can take away from the excitement of the future. But don’t be tempted to fund college when you should be setting aside money for you to care for yourselves and enjoy life.
We can guarantee that the future is coming. 100% Guaranteed. Start saving for it.
As entrepreneurs, we don’t love the thought of retiring, but we’re just fine with slowing down, and spending a few months in Rome. The thought of the Colosseum makes saving money just a little bit easier.
Make it happen!
Scott & Bethany Palmer