Truth bomb: Saving for retirement as an entrepreneur is difficult. As you prepare to launch a business, every cent goes into materializing your dream. Then, you wait for the moment you can pay yourself a reasonable wage. After a while, you make ends meet and want to put the extra cash into growing the business, whether it’s buying new equipment or attending professional training. In the excitement of it all, it’s easy to leave a gap in your financial future.
During my first year of full-time self-employment, I set up the necessities, including self-employment tax payment reporting, a life insurance policy and a Roth IRA. I thought I was set, but the more I look into my savings situation, the more I realize I’m not prepared enough. I need to diversify, implement some short-term investments and bump up my monthly IRA contributions.
A False Sense of Stability
During my launch phase, I was razor-focused on promoting my services and getting my name out to potential clients. I needed work! At the time, my day-to-day routine included checking website metrics, drumming up assignments and invoicing new clients. Momentum was building, but I wasn’t looking at the whole picture.
I followed all the usual small business tips gleaned from webinars, classes and research, but I never felt I was at a point where I could think beyond the monthly expenses of the business. After talking with a friend, I realized I was lagging behind others my age who had traditional employers matching their retirement contributions and gifting CDs and stock options over the holidays.
Whenever I read about being a young entrepreneur, the advice was tangible, and I could’ve implemented it that day. But I wasn’t thinking broad enough to realize the future is just as important as growing daily operations.
How to Make Saving Easier
As I make better savings and investment decisions, I’ve also been daydreaming of how saving for retirement could be easier. There’s a movement to encourage small business ownership, but beyond tax breaks and flexible scheduling, we need more. Here’s my wish list:
- Matching Funds Program: It’d be amazing to find a company or national economic stimulus program that promotes entrepreneurship and, as an incentive, offers small business owners matching funds when they make contributions to retirement savings accounts. Maybe each year a small business shows a profit (and, in turn, a positive impact on the local community), the level of contribution increases until they reach 100 percent matching funds.
- Monthly Guidance: Saving for retirement isn’t a one-and-done endeavor. As your life changes through marriage, starting a family, buying a home or enduring a disability, your future income requires evaluation. It’d be easier to save for retirement via a monthly coaching program that includes identifying investment changes to best fit your life stage. Knowing I could meet with a retirement professional every 30 days would keep this topic top of mind, and I would have been more financially secure earlier on in my small business adventure.
- Interactive Approach: My current retirement investment program generates an annual statement showing contributions through the previous calendar year and growth or loss on the funds. The paperwork is helpful but boring. I’d love to receive monthly emails or use an app that shows real-time investing progress, where savings opportunities might linger, and ideas for how I can better invest the money I put away.
Along this journey, I’ve made many smart decisions, but some could’ve been better. I’m aware of my financial planning downfalls and have already begun making changes to set me up for a healthy retirement. While living your journey, just remember to step back and review your retirement planning. Are you saving enough to enjoy your golden years?