Being an entrepreneur gives you the opportunity to spend your career doing something you love. Whether you grow your business or spend your time developing innovative products and building a series of startups, you’re the master of your own destiny when you’re an entrepreneur.
While there are plenty of advantages to working independently and owning a business, it does mean that you won’t automatically get the security and safety of being an employee. Being self-employed or appointing yourself as the director of your company will give you certain rights, but you’ll still be responsible for ensuring you have access to workplace benefits.
When you’re building a career as an entrepreneur, your time will be spent sourcing funding, developing products and services, launching new businesses and, hopefully, enjoying your success. However, it’s crucial that entrepreneurs plan for their retirement too. By making this one of your top priorities, you can ensure that your financial future is fully mapped out.
If you’re not sure where to start, take a look at these top tips for preparing for your retirement as an entrepreneur now.
1. Start Early
It’s never too early to start preparing for your retirement. It may be decades away, but the earlier you start to prepare for your retirement, the more time you’ll have to save or invest. Savvy entrepreneurs typically start thinking about their retirement in their twenties, so don’t put off making plans until retirement is looming. Instead, get ahead of the game and make your financial future a current priority.
2. Have Defined Goals
You don’t have to know how you want to spend your retirement in order to start preparing for it, but it can be useful to have some goals in mind. Perhaps you want to spend your retirement enjoying time with family and friends? Maybe you want to go on a solo round-the-world trip? No matter how you dream of spending your senior years, establishing some objectives will give you the incentive to prepare for your retirement.
3. Make Regular Contributions
Contributing to an employer provided retirement plan can be the most advantageous way to plan your financial future. A defined benefit plan for the small business could be the ideal way for entrepreneurs to prepare for their retirement, particularly if they want to reduce taxes at the same time.
4. Leverage Risk
Many entrepreneurs are natural risk-takers, which typically helps them in their career. However, the amount of risk you’re prepared to take should reflect your current position in life. In your twenties or thirties, you might be willing to take bigger risks, knowing that you can begin again if you need to. As you approach retirement age, however, you may want to reduce the amount of risk you’re prepared to take. No matter how tempting a potential investment seems, keep your future in mind when deciding whether or not it’s the right opportunity for you.
5. Consider the Tax Implications
Entrepreneurs often own numerous businesses, rather than just one enterprise. In addition to this, they become experts at sourcing funding, gaining backing and obtaining financial investments in order to launch new companies, products and services. When you’re planning for your retirement, be sure to consider the impact it will have on your current operations.
Contributing to a defined benefit plan for the small business can be a great way to reduce your current tax liability, for example. By maximising your contributions throughout your working life, you could reduce the amount of tax you or your business needs to pay. Similarly, you can increase the benefits you’ll receive in the future by increasing your personal income now, providing the additional payroll tax doesn’t exceed the future tax-free benefits you’ll gain.
6. Think Strategically
Some entrepreneurs are planners and thinkers, while others are spontaneous and carefree. Regardless of your natural tendencies, it’s important to think strategically when it comes to planning for your future. By doing so, you can ensure that you’ll have the finances you need to live out your dream retirement when the time comes.
Start Planning for Your Future Now
If you don’t already have a retirement plan in place, it’s time to take action as soon as you can. Start thinking about how you want to spend your future and then assess the resources you’ll need to make it happen. By obtaining expert advice from professional pension experts, investment managers and financial advisers, you can get the support and information you need. It isn’t something that you should take on by yourself, so find the necessary help that you need. With the right mix of optimism, hard work and planning, entrepreneurs can look forward to a retirement filled with fun and financial security.