For self-employed individuals, a target retirement age is not a major issue since they do not have employers setting one. According to the researchers, many self-employed people retire well above age 65. About 40 percent of people across the world never retire. Researchers said that about 17 percent of self-employed workers in the United States will work longer before retiring. More than 20 percent of self-employed workers in the USA said that they would not change the way they worked when reaching the age of 65.
Self-employed people cited good reasons for continuing their work such as staying active while others simply enjoyed their work. However, about 30 percent of American self-employed workers cited financial reasons for continuing work. Most of these workers also said that they had anxieties about earning enough money to live on throughout retirement. Additionally, about 25 percent said that they had not consistently saved enough to think about retirement.
According to researchers, self-employed people also lack the motivation to save in many instances. In a traditional workplace, employers emphasize the importance of retirement savings and have initiatives to participate. However, self-employed people must take a DIY approach to successfully save. According to the survey, about 30 percent of self-employed individuals saved money regularly for retirement.
6 Ways Self-Employed People Can Save For Retirement
While self-employed people have more flexibility in their work and retirement, they must be dedicated to retirement planning in order to succeed. Only about 25 percent of people across the globe said that they were very confident in their financial retirement preparations. These are some simple ways for self-employed people to boost their retirement savings.
Save consistently over time. Start saving as early as possible. When income fluctuates, save more at high points and less at lower points.
Use tax advantages for saving. Many savings plans come with some good tax benefits. For self-employed people who pay their own taxes, these breaks can lower financial responsibilities. Individual 401(k) plans, IRAs, SEP IRAs and several other options exist.
Research local options. Check with a trade association or the local chamber of commerce to see what options exist. These programs often provide an excellent value.
Automate savings activity. Set up automatic funds transfers as an extra incentive. The automatic transfers can be from a checking account to a savings or retirement account.
Make Social Security contributions. Although some people are tempted to report a leaner income for a lower tax burden, this also hurts future Social Security income. A lower benefit amount may not be worth the few dollars saved in taxes over a long period of time.
Build a financial plan with a backup plan. First, develop a solid savings strategy. Think about disabilities or other incidents that could cause a negative financial impact. Next, use those possibilities to develop a backup plan. Investments, contingency planning and a business exit strategy are all important topics to consider.
For more information about retirement planning, speak to an agent at HALO Insurance & Benefits Group today. 314-351-HALO (4256)