Retirement is something that brings joy and sadness both at the same time. Joy is for the rest you will be finally getting and the sadness is due to all the thinking and worrying you do because you know you are not going to be earning any more.
A happy retirement life is not spontaneous; it never can be especially when you are a small business owner. Today, being an entrepreneur looks so right and fun but have you given a thought that how would you be handling your financial life after you get retired? I know to be your own boss is the new trend but there is so much that you have to think through before making into this world.
For others, retirement can be a little (if not a lot) comfortable, but for a small business owner, an entrepreneur it would be tough. But if you be careful and thoughtful now, you will have nothing to be worried about even after your retirement because every one of us deserves a happy retirement life.
For all the small business owners out there, have you heard of IRA (Individual Retirement Accounts)? If yes, good, if no then here you go. Here I am going to list few options that will help you with the retirement life you have always desired.
It is one of the most known and popular forms of retirement saving count as it gives us the maximum tax benefit. Anyone who has or whose partner has earned can open this account, people with alimony money an also open the IRA. You can contribute up to $5500 in your account which sounds low in comparison with other retirement accounts and that I think is the only drawback of IRA.
There are two types of IRAs that you can deal in with a Roth IRA and a traditional IRA. Click here to get some more guidance on IRA.
Simple IRA is another way of ensuring a happy retirement life. It offers tax-deferred and pretax contributions, an employer’s match and an employee’s contribution. Any person who is a small business owner with hundred or less than hundreds employees can enjoy its benefits. An employer can make a 3% matching contribution or else a 2% non-elective contribution while an employee can make up to 100% contribution.
A Simplified Employee Pension plan is open for any freelancer, sole proprietor, people working in a partnership. SEP is a traditional IRA with much higher contribution limit; it all depends on your income. People who have employees working for them then you have to open an account for them too as you have maintained it for yourself because here the employee is not allowed to open an account for themselves.
NOTE: The above plans can also imply to the freelancers who are moving from one company to another and then another for excellent opportunities, but none of these companies are going to give them a pension or other retirement benefits afterward.
Author Bio: Sarah Smith has been a personal finance author for the last five years. She is also an independent and very passionate finance and investment advisor.