One of the biggest benefits you will enjoy if you are self-employed is that there are more (and some would argue better) retirement options and plans available to you than are available to most taxpayers. You still have the ability to use the ROTH IRA and Traditional IRA. But being self-employed gives you three additional retirement savings options: SEP IRA, SIMPLE IRA, and Solo-K. With all these choices, how do you know which is the best retirement plan for the business owner like you? We will explore the pros and cons.
Downsizing, especially after the children are on their own, is a frequently used approach for managing your income for life. Reducing housing expenses can save tons of money. If you reside in a highly appreciated area where your home could be worth a lot of money, selling can free up a substantial amount of cash flow or even be used to wipe out debt. What is left over can then be added to your nest egg or even used to cover future long-term-care expenses. Keep in mind, if you are married you can protect up to $500k of your profit from capital gains taxes when you sell your home. If you single, it is half of that amount.
We all know that healthcare costs are outrageous, no matter what your age it. However, the average couple can expect to spend close to $300,000 on out-of-pocket medical expenses, such as such as deductibles and Medicare premiums, during retirement. Sadly that is not factoring long-term care costs into the equation. When coupled with that, medical expenses can be a major budget buster, and you can see why planning for health care expenses is essential or better yet critical to maintaining an income for life.
Recently, I had a client recently that have a question about his ten-year plan. He’s going to be selling his business, and we are building the value of it up for him to sell. Along with his business, he has this really, small retirement account. Most business owners don’t focus on their retirement accounts that much. I’m one of them. I don’t focus that much on it. For the most part, I mainly focus on my business. I mean I do have retirement accounts; however, it’s just not something I, or most other business owners, spend a lot of time on.
Choosing a financial advisor can seem overwhelming when you first start…especially if you’ve never delved into the financial world yourself. It can be tough knowing what to look for. However, there are some strategies that you can utilize to find the advisor that gels with your needs the most and will help you reach your ultimate goal. Making use of these three questions will undoubtedly land you with the advisor that can help you trek down the path you desire.
As we continue strategizing ways to ensure you have income for life, the next plan of action, may or may not apply to you—manage your pension fund payments. With these types of old style retirement accounts becoming akin to the rotary phone, if you do actually partake in one, consider yourself lucky. The choices you make concerning how you take your money could considerably affect the income you receive from it.