Prepare for risk.
True, most entrepreneurs are optimists at heart. But you have to think about worst case scenarios to better assess risk and prepare your business (and yourself) for some of life’s hardships, such as injury, illness, death, and so on.
If ever there comes a time when you can’t helm this ship, what would you like to happen to your business? Do you want to sell it? Do you want to pass it on to someone else, such as your child? How much and how to save for retirement will depend on the answer to these questions. Of course, you’ll have to take action to make sure all the legal formalities are in place should you ever step away for whatever reason.
Meet with a financial adviser.
An accountant or financial planner can help you make more informed decisions about your money, including savings, taxes, and investments. Once you know what you want, a financial planner can tell you how to make that happen. It’s just smart to get an expert to weigh in on these matters, especially if the finance side of the business isn’t your strong suit. If you don’t want to meet a financial adviser, at least take stock of what’s happening.
Start saving as soon as possible.
Ideally, you started socking away savings for retirement as a young person. Realistically, you probably didn’t. Most people don’t, unless an employer is matching a 401(k) plan and there’s a pension on the table. In general, entrepreneurs are on their own. Whether you see a financial planner or not, you need to decide how to save for retirement. You have many options, including simple, SEP, traditional, and Roth IRAs or regular or solo 401(k)s. Each has its pros and cons, and with a little research you can find the one that is the best fit for you.
Grow your business.
Having a healthy business that is growing in stature and bottom line is a surefire way to be retirement ready. It will mean more money for the business, its employees, and you. It will increase its value should you ever decide to sell. While you might be tempted to keep putting money back into the business, especially in its infancy, consider paying yourself from the start. This way, you can build up savings well in advance of retirement. And that far-away day won’t catch you off guard.
How are you planning for the future? Let us know in the comments below.