Of course, investing in the growth and expansion of your business is always a good idea… but you must invest in yourself and your future as well.
Why You Should Start Planning Now
All things aside, the most obvious reason to start saving for retirement as early as possible is the abundance of time you have when you’re young. With the retirement age in the UK estimated to be around 75 these days, those who start saving in their early 20s can benefit from 50 years worth of compound interest if they plan to retire at the official age. Furthermore, the younger you start saving, the less pressure there is to have huge monthly payments (though you should make the biggest payments you can afford, as it will get harder to make large payments to your pension pot if you decide to have children later). On top of all this, early planning nurtures good saving habits which are sure to see you through rough patches in life.
So, as a smart person, you can probably see why it’s a good idea to start saving for your Golden Years today… the question is how to do it.
How Entrepreneurs can Save for Retirement
If your head is spinning and you feel a little in the dark, the first thing to do is to schedule a chat with a professional..
Here’s what else you should be doing to get ready for retirement;
Increase Your Tax Efficiency
Having a tax advisor might seem like an unnecessary expense, but when you start pushing into higher tax brackets they can be invaluable. Taking advantage of tax breaks, or even setting up a limited company and paying directly into a pension fund before paying your own salary. This is a very clever way to start saving as your salary is subject to national insurance payments, but a direct payment would not be.
Assess Your Options
This may seem like an obvious thing, but considering the large percentage of freelancers and entrepreneurs who don’t have any savings, it needs to be said. Consult with a company like Clearkey to find out what pension plans are available and what their requirements are. Once you have your top 3 choices you need to assess your business and finances.
Make Yourself Whole First
If you were running a large company in the UK, your employee’s pensions would be considered part of the costs of running not an additional luxury. You need to change your thinking to match this when it comes to your own pension pot. Pay your bills, your taxes, and your pension before you pay yourself or invest in the growth of your business. Once you start to consider your pension pot part of your overhead costs, paying it its due becomes second nature.
Prepare an Exit Strategy
When that fateful day arrives, and you sail off into your golden years, what do you see happening to your business? Will it be run by your children, or do you plan to sell it? Think about your options now and consult with an expert to make sure that your plan is airtight.
It’s never too soon to start saving for your retirement, but even if you’re a little late to the party Clearkey can help you put these measures in place and catch up with the office crowd.