According to the survey, over 55 percent of U.S. respondents said that they envisioned working past retirement age or never retiring. Over 20 percent of the respondents said that age would not affect how they worked, and they planned to continue doing the same type of work indefinitely. Another 20 percent said that they would change their work habits after retirement but would not stop working. Almost 30 percent of respondents said that they would reduce their workload before fully retiring.
In response to these statistics, TCRS suggested some ways for self-employed individuals to financially prepare themselves for retirement. These were the top suggestions provided:
- Start saving as early as possible in life, and establish a habit of regularly saving as time passes.
- When income is irregular, save more during periods of abundance and less during dry periods.
- Use tax-advantaged savings vehicles such as SEP IRAs, IRAs, 401(k)s and others.
- Ask the local chamber of commerce if it offers a savings vehicle or if any local trade associations have similar options.
- Set up automatic deposits or transfers for a savings account to ensure healthy contribution habits.
- Contribute regularly to Social Security to ensure adequate benefits during retirement.
- Create a financial forecast and savings plan that includes an alternate business plan.
- Be sure that financial plans address current and future needs.
- If applicable, develop an exit strategy and a financial plan for a successor in the future.
TCRS stressed the importance of Social Security contributions. Some people wind up withdrawing funds from their retirement savings for medical emergencies, paying a mortgage or other reasons. It is important to have Social Security income as a cushion. Since benefits are based on work history, under-reporting income to slightly reduce a tax liability can be a costly long-term mistake.
When developing financial plans for a small business, work with a financial adviser. Many people make the mistake of doing DIY planning with online forms. Each business is unique, and standardized forms or packets may not address all specific needs. Financial advisers can ensure that every party is protected legally and financially. Ask about retirement savings options and strategies with your trusted financial adviser 314-351-HALO(4256).