The best time to start planning for retirement is when you start working. Yes, even the teenager flipper burgers at their first job would be well-advised to start setting aside some savings for their eventually retirement. Today, a lot of Americans identify as self-employed. That means that have to be extremely proactive when it comes to retirement planning. They don’t have a company that is going to be providing a pension plan. These are the tips for retirement planning that will be a big benefit for anyone who is self-employed.
Start a Budget
Everything begins with a budget and that includes retirement planning. The money that you are spending today on regular bills and expenses probably won’t change by significant amounts when you retire. That is why it is important to set up your budget today. In addition to your living expenses, your budget should also include your financial goals like savings both for a short-term emergency fund and your long-term retirement.
You need to get into the habit of saving money from each paycheck. That might be a challenge but even setting aside $25 to $50 from each paycheck can add up especially if you are making those savings over a period of several years.
Open Retirement Accounts
There are many retirement accounts that have advantages when it comes to tax filing time. The money that you put into those accounts could be tax deductible. You’ll want to look into IRAs and individual 401(k)s. Once you do your homework, you want to start making those contributions on a regular basis.
Make Automatic Savings
A lot of employer-based retirement plans operate with automatic savings. Deductions are taken out of your paycheck and transferred into those savings accounts. You can set up the same kind of automatic deductions. Instead of coming out of paychecks, they can be monthly deductions taken from your checking account.
Plan for Future Financial Shocks
One of the biggest things that can upend a retirement plan is paying for medical expenses. That is why it is important to make sure you have good insurance coverage. This can be a unique challenge for someone who is self-employed but there are good plans out there that can provide significant relief in times of a medical crisis.
Ask for Help
Once you get into the habit of savings for your retirement, you might accrue enough funds to put some of that money into investments that can generate returns such as in mutual funds. This is where you might seek out the help of a financial advisor who would be in the best position to help you with those investments. Your bank probably has staff dedicated to this very idea. It won’t cost you anything to talk to them and explore the options.