Retirement for Entrepreneurs

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This topic contains 3 replies, has 3 voices, and was last updated by Profile photo of Antoinette Minor - Ambassador Antoinette Minor – Ambassador 1 week ago.

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  • #3820 Reply

    Hi All,

    I go back and forth probably 5 times a month on whether or not I should take the leap into entrepreneurship. Every time I say no because I’m scared to lose the benefits my employer has. Retirement pack is one of them. Do any of you have suggestions or can give advice on what you would do to make sure you can retire if you’re and entrepreneur?

    #3851 Reply

    Hi Antoinette, you’re wise to consider this *before* making the move! The good news is that there are definitely great options for self-employed/small bizness owners when it comes to retirement. In my case, I have my own consulting practice and I set up a solo 401k. It works exactly the same as an employer plan – there are individual contributions and employer contributions – except, of course, that it’s ME in both of those cases! The contribution limits are generous – for the individual it’s $18,000 and as an employer, it’s up to 20%ish of net profit (I say “ish” because there’s some math to do to figure out the exact amount). The total combined contribution is in the $50,000 range. It’s actually an amazing way to sock it away (even catch up, like I had to) because of those generous contribution limits.

    Vanguard has a really good comparison on their site: https://investor.vanguard.com/what-we-offer/small-business/compare-plans?Link=facet

    Good luck!

    #3859 Reply

    Definitely a good idea to be cautious before making the jump, but if you can manage to put a good percentage of your income into an IRA or some kind of retirement account, then go for it! It’s just going to depend on how much you can actually make as an entrepreneur. There are some entrepreneurs easily managing to save for retirement while there are other full-time employed non-entrepreneurs with $0 saved for retirement. It’s just about making it a priority.

    #3905 Reply

    Thanks for your replies! I’m definitely going to look into the solo 401k and keep it as an option when I do decide to take my leap.

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