There is no doubt over the fact that being self-employed in the best way to make your career and also to create a distinct self-respect and dignity for yourself. But, problems arise while planning for retirement when you are self-employed as you need to do it all by yourself. However, you may find out that it is indeed possible to retire comfortably as others do even when you are self-employed and the key to this approach should be to implement smart investment and savings strategies. The below instructions will help every self-employed person to plan their retirement in a very comfortable manner so that you can reap the fruits of your hard work during your old age and can complete all your unfinished dreams in your retirement life.
1) You need to have a rough idea of what your retirement expenses will be and how much income do you expect during your old age. This will help you to determine how much additional income you will require after your retirement. In order to calculate this amount approximately, you need to take into account the income from your pensions as well as from Social Security. For the expenses part, you need to have a rough computation about the expenditure for things such as medicines and medical care and increased travel. Taking into account both these aspects, you can understand the additional income which you require in your retirement life.
2) It is important that you budget your savings. You need to understand that what you save actually goes into your retirement savings. You need to consider your retirement savings as weekly or monthly expense so that you understand the importance of this contribution.
3) It would a wise decision if you become a part of a tax-deferred savings plan as this will surely help you in your old age. Most of us have probably heard of Individual Retirement Accounts or (IRAs) but there are other savings plan which are specifically designed for the retirement planning of self-employed people. These are the Simplified Employee Pension plans (SEPs), Keogh Plans and Savings Incentive Match Plans for Employees (SIMPLEs) which are in great demand in the current times.
4) One of the best ways of saving on retirement is to invest in stocks and bonds. This will prove to be a great method of investment especially if you are investing at an early age. You can decide which combination will work in your favor that is, you can either go for potentially volatile, higher growth stocks or you can choose the more stable, lower growth bonds depending on their personal preference and risk taking options.
5) Purchasing an annuity is a great method of investing for the future. Annuity refers to an investment contract which will guarantee you that you are obliged to receive a set income as part of your investment.
6) You can also consider the option of going to work after you retire. You can still carry on working by initiating a small business or for going in for consultation on a part-time basis which will in turn keep your mind active and will also add to your income in your old age.
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