For new business owners and entrepreneurs, there’s often a lot on your plate, to say the least.
All that time spent drafting and creating your new business can leave you out in the cold when it comes to planning for retirement.
It may sound strange to be thinking so far ahead, but the truth is that good retirement plans start early. But without employee-sponsored plans and administrators who handle the legwork, what kind of options do small business owners even have?
Open an IRA
You’re probably familiar with the basic tenets of an Individual Retirement Account (IRA), but in case you’re one of those lucky entrepreneurs who’s never had to work for the man before, you’ll need to start with the basics.
There are many different types of IRAs, but traditional or Roth IRAs are the simplest option for business owners. There aren’t really any specific filing requirements, you just put money into the account. Participants younger than 50 can put in $6,000 per year, post-taxes. Roth IRAs are especially attractive because of the tax regulations (or lack thereof).
Open an HSA
Opening a Health Savings Account (HSA) may not be the first thing you think of when figuring out how to save for retirement. HSAs are generally offered as a supplement to high-deductible health insurance plans and help to cover medical expenses. And they’re aren’t just limited to strictly medical procedures, either. An HSA can be used to pay for health expenses like braces, which can cost thousands of dollars.
HSAs are especially useful if you have a family and young children, and contributions can be put in the account after taxes. And the best part? The HSA money is and stays your own money, accruing interest.
Develop an Exit Strategy
It may seem strange to start planning an exit strategy even as you’re just getting your new business together, but this is an idea that should go hand-in-hand with thinking about retirement. You don’t need to have a specific day planned, of course, but having a rough retirement age in mind about when you want to exit your business can help you make long-term goals for growth. Many business owners, in fact, use their business as a retirement, selling a successful business off and using the cash for their golden years.
It may seem very far off sometimes, but responsible retirement planning begins early. It’s especially important for those running their own businesses to take time to think about the future and set aside the necessary funds.
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