How to Save For Retirement When You’re Self-Employed
Planning for retirement is a bit trickier when you’re a self-employed entrepreneur. Many business owners plan to use the sale of their company as a retirement asset, but it’s never wise to put all of your eggs in one basket.
Additionally, even if you quality for the Canadian Pension Plan or the Old Age Security Pension (which can be fully utilised at age 65), you’ll likely still need additional funds to maintain a comfortable standard of living.
If you’re ready to start saving for retirement, here’s what you need to know.
When it comes to selecting a retirement savings plan, there are two main options that should be investigated:
If you can afford it, contribute to both accounts. If you need to choose between one or the other, visit this page to learn about the key differences and benefits.
Enlisting the help of a qualified financial professional can also be incredibly helpful — he or she can help you maximize savings, make smart tax planning decisions, and more. For example, some business owners need to decide whether they should contribute to an RRSP or take dividends.
It can be tempting to put as much money back into the business as possible, but this isn’t the best long-term strategy. Even if the business is bootstrapped at the moment, see if some of these smart savings strategies can free up funds:
Use the money saved on office space, travel, extraneous office expenses, and other unnecessary costs to contribute more money to your retirement accounts. Delegating certain tasks (like administrative duties) can also save money in the long run, because you have more time to focus on growing your business.
If you take one thing away from today’s post it should be this: You can never start planning for retirement too early. If you don’t have a retirement strategy in place today, there’s no better time to start planning than right now!