Anyone who is self-employed knows that unexpected expenses can pop up. Those unforeseen expenses can slowly bleed business accounts dry, which can put a damper on plans to save for retirement. Many self-employed people place retirement planning on the proverbial back burner. The stress of paying monthly household bills, as well as business-related expenses, takes precedence.
Retirement planning is essential for the self-employed. People that have a traditional company job, often qualify for benefits after a probationary period. These benefits usually include retirement packages. Independent workers have to fend for themselves regarding health insurance as well as retirement provisions.
Put aside a set amount of money each month and tuck it away in savings. It's not as hard as it sounds. Most savings accounts accrue interest over time. If you can only put $50 a month in savings, that's $600 a year. That's $12,000 after 20 years, not to mention all the interest accrued in that period. The most important thing to remember about having a retirement savings account is not to withdraw from it for any reason. You will be thankful when you reach retirement and have that money to fall back on.
Another good thing to do is watch unnecessary spending now. Think of it as taking care of yourself later by not spoiling yourself now. You can see where your money goes by creating and sticking to a budget. Self-employment requires hard work, creativity, and dedication. Don't let your years of hard work have been futile come retirement time.
A representative at your bank can provide you with information on Roth IRAs and 401(k) plans. Both have pros and cons, and in the long run, checking into one or the other could prove beneficial. A financial planner can get you pointed in the right direction by providing valuable information about retirement options for self-employed people. Financial planning isn't always a straightforward process; professional help can give you peace of mind.
You might want to consider investing some of your money. It is essential to do your homework first, however. Spend some time researching companies and stockbrokers, and watch the trends in the stock market to see which businesses hold steady. If you hire a stockbroker, make sure that person is reputable, someone you can trust with your money. The idea of investing is to make money, not lose it, and plenty of shady characters and companies are eager to separate you from yours. No matter how long you have been in business for yourself, you need to start planning for your financial future now. Don't wait until it is too late.
Savings accounts, budgeting and investing are all good steps in the right direction toward retirement. One of the best things you can do is speak with a financial professional to discuss retirement plans, investments and other options, some of which you may not even be aware.