The challenges that you face as a self employed person in establishing a better retirement might be greater than those who are employed. There are no employers retirement plan to begin with and you are basically on your own. You are going to plan and establish your own retirement. A successful retirement all begins with a well drawn and executed plan. If you want financial security in your retirement, start now and work on it. Financial security doesn’t happen overnight. It takes years to build and grow. Here are some tips on how to effectively establish your financial nest for your retirement.
1.) Start saving. If you have no idea on how and where to start, don’t fret. You can start by developing the habit of saving. If you haven’t been saving before, start saving some of your monthly or recurring income. If you’ve been saving consistently already, try increasing the amount that you save. The suggested amount to save is at least 10% of your monthly or recurring income. If you can do that, you can have at least 120% of your monthly income in a year. Saving doesn’t require much. You don’t have to be a rocket scientist to start saving.
2.) Anticipate your needs. Retirement is expensive. You will need all the cash that you can save in order to cover medical needs. If you intend not to ask any support from your children, you’ll need a steady incoming cash flow for that matter. Experts suggest that you’ll need at least 70% more of your preretirement income when you reach more than 60 years of age to maintain your standard of living and cover additional expenses. As early as now, you should think about ways of how to provide yourself an income when you retire. Will it come from investments? Businesses? It’s your choice.
3.) Get yourself covered. Health care and insurance are very important for people who are building their financial foundation. Health care will take care of the medical and hospitalization expenses in case you or any of your loved ones get sick and insurance will provide your loved ones financial assistance in case your income generating capacity is gone. While working for your retirement, you’ll need these two because it will keep you from touching your savings in case you get sick. Some health care and insurances also come in with additional investment features such as bundled with mutual funds which could provide you more options when you retire.
4.) Eliminate debt and increase emergency fund and savings. Debt should be settled as soon as possible. It is something that will pull you down financially and keep you from moving forward. If you have an existing debt, make it a priority to pay it off. If you don’t have any debt, never think about it not unless if it is a good debt. A good debt is a debt that could give you more money (more than the debt itself and its interest). However, good debt is still debt and must be paid off quick. Increasing your cash inflow will increase your savings as well. Save some for your emergency fund while save some for other purposes. Emergency funds are intended for emergencies and should not be touched for leisure or wants. You can use the other amount for investments or starting a business.
5.) Invest and protect your investments. The best use of money is to invest it. If you invest your money, you will have the opportunity to make it grow. There are several ways to invest such as paper assets like stocks, mutual funds, and bonds or tangible assets such as real estate and having a business. Investments can provide you a good income but it will take years or even decades for you to enjoy its benefits. That is why it is important to get yourself covered first with health care and insurance and have an emergency fund so that you will not pull out your investments once the need arises. You should also protect your investments by having insurance. Times are unpredictable and your investments might be affected by different factors. Insurance will at least provide financial assistance in case your investments go down.
6.) Find a financial adviser. There is no better way to guide you in establishing your financial foundation than a financial adviser himself. Financial advisers can provide you different options and probably the best options for your retirement giving you the best value for your money. They can give you information about tax breaks and other legalities and how to use them in your favor. The best financial adviser that you can find is the one that is in line with your investments. If you’re into stocks and other paper assets, find an equity analyst. if you’re into real estate, find a professional broker that could guide you. Financial advisers can protect you and keep you from making very common mistakes that could make you lose a lot of money. Most financial advisers come in with a fee but they are all worth it.
7.) Invest in knowledge. The best investment that you can make is through education. Educate yourself on the things that you need for retirement. Knowing how insurance, health care, and investments work is not enough, you should go a little deeper and understand these things. Deeper knowledge on these things could make you find what you really need the most and in some cases, can also protect yourself from scams. Read books, ask questions, attend seminars and presentations, or even consider enrolling to crash courses. If you know how money works, you can make a lot and have a very comfortable and worry free retirement.