Small business owners are in a different boat when it comes to saving for retirement. Unlike their employees, business owners don’t just check a box once to keep taking money out of their paycheck each payday. This means they have to be even more disciplined when it comes to saving money. They don’t have the luxury of not thinking about it.
To stay disciplined, many business owners have found setting a goal to challenge themselves can encourage them to set a certain amount aside each month. Goals are good motivators and increasing those goals every couple of months could help set aside a decent amount for retirement.
Treating saving for retirement like a bill, is another trick used by many successful small business owners to consistently save each month. A self directed SEP IRA account can be the perfect vehicle for business owners to use when saving for retirement.
Business owners who have a flexible income often find deciding on a percentage of their income rather than a fixed amount can be a more practical approach. Also, taking small steps into saving can help. Instead of planning on a huge percentage if it isn’t practical at the time, start small and build up.
The individuals at Mountain West IRA can help small business owners set up a retirement plan to help them successfully save. They offer many options and can help determine which retirement program will best fit the situation.
Retirement is seen as a time to enjoy the finer things in life. Many plan on international trips, golfing every day, and living a little more luxuriously. What they don’t take into consideration, is that they will no longer have an income to replenish what these grand plans use up. Some retirees need to rethink their retirement plans and look at it a little more realistically.
Instead of increasing expenses, it is more beneficial to downsize. Moving to a less expensive residence and taking a long look at what expenses they could cut might make them feel better in the long run. A little reimagining could be the difference between living comfortably the next 20 to 30 years and feeling panicked at the lack of money in their bank account.
Of course, a way to keep those luxurious plans alive is too bump up retirement savings. Soon-to-be retirees can look into investment opportunities and try to increase what they have already saved. Self-directed IRAs can help by offering more options for investing and increasing savings. But the key here is to still be honest with themselves. Waiting until the last minute to do this won’t help much.
Mountain West IRA offers different types of plans to help everyone find the one that fits their financial situation. With self-direction, those planning for retirement have many more investment options including real estate, precious metals and more. They can help build the ultimate retirement machine.
When the time has come to starting preparing to leave the workforce, getting everything in order is a good idea. There are key steps starting a year out that one should take before retiring.
- 12 months out
- Cut back on stock investments. A downward trend in the market could affect years of saving.
- Create a retirement budget. There are multiple calculators to help figure this out based on expenses and one’s nest egg.
- Six months:
- Figure out health care finances. If a Health Savings Account hasn’t already been set up, this is the time to discover what coverage option will work best.
- Three months:
- Begin the rollover process. The professionals at Mountain West IRA can help with this.
- Plan ahead. Start thinking of how to fill time after retiring. Research volunteer options in the area, discover a new hobby or look into starting a new business.
Planning for retirement can be overwhelming and stressful. Mountain West IRA can help take the stress out of retirement planning. They have multiple plans to fit everyone’s needs.
Navigating the retirement planning waters can be tricky, especially with advice coming from all directions. However, there are a few basic mistakes one should try to avoid when saving money for retirement.
- Lack of Diversification – Keep investments diversified to spread risk. Going all in on one investment opportunity can potentially lead to a huge loss. Keep in mind the old adage: don’t put all your eggs in one basket. If one investment goes south, there are others to keep money flowing in.
- Missing Educational Opportunities – Not taking the opportunity to further education or training to help advance in a career and potentially expanding earnings is a mistake. The training or education might take money now, but will more than pay for itself down the road. Increasing one’s salary is increasing savings potential.
- Poor Time Management – Forgetting about time management could potentially hurt retirement savings. In the beginning stages of retirement savings, when there are many years to save, it is acceptable to take risks with investments, and can even be highly beneficial. However, when retirement draws nearer, it is best to take a more conservative approach, so one does not lose money right before it is needed.
- Pulling Funds – Taking money out of retirement accounts and funds early is generally not a good plan. Doing this can cause penalties and be regrettable down the line. Keep retirement savings as a priority throughout other financial decisions, such as buying a home. While it seems attractive at the moment, it could really cause issues closer to retirement.
- Lack of Planning – The biggest mistake of all is not planning for the future at all. Mountain West IRA can help find a retirement plan to get on the right track for retirement saving.
Some retirees find fulfillment in continuing to work after retirement. And it might not be such a bad idea to consider working part time after you decide to retire. There are numerous benefits that can come from it.
If you aren’t comfortable with where your retirement savings are sitting, part-time work could be a good option for you. Hopefully you set up some type of retirement plan whether it be a self-directed IRA or 401(k), but if not, you could be in the same boat as a lot of households between the ages of 55 and 64 that only have $12,000 in retirement assets. Continuing to work could help increase your nest egg and make retirement a bit more comfortable.
Do you currently have a mortgage? Almost half of homeowners age 62 and older have a mortgage. If you have to withdraw from your retirement account to pay off your mortgage, you’ll have to pay more taxes on your retirement distributions. Finding part-time work to pay off the mortgage will reduce your cost of living during retirement.
Sometimes you can be lucky enough to find a part-time job with health care coverage, which can help cover your health care costs. Medicare kicks in at 65, but if you decide to retire before you reach that age, you’re on your own. Setting up a Health Savings Account is another way to help take care of health care costs.
For decades, your purpose in life was your career. It can be daunting leaving that behind and trying to find a new purpose. Working-part-time can help ease that transition while helping to fill your days and bank account. Along with giving you a purpose, continuing to work can help keep you in shape physically and mentally.
A lot of people go through a downsizing period when retiring. Downsizing can include your living space, family heirlooms and other items. Something to keep in mind when downsizing is to focus on how each of these things will serve you in the future and not the importance they had for you in the past.
Living space is a primary area for downsizing during retirement. A house with multiple bedrooms and levels is great for a growing family, but not so much for a couple or individual. That much space isn’t needed and stairs may no longer be a viable option. Downsizing to a smaller house, condo or retirement home can be a great idea.
Location also plays a factor. Living farther out of town can become a hassle especially if driving abilities become limited. Moving closer to the center of town also saves on gas, leaving more money available to spend on fun activities. Depending on your retirement budget, you could also consider moving to a new town, state or even country. This can cut down on costs depending on the location you choose. There are many areas that are considered great locations for retirees. They are often in warmer parts of the U.S., with lower costs of living and an abundance of activities.
We have a tendency to accumulate stuff throughout our years and are reluctant to let it go. Some of these things are family heirlooms and can be relinquished to family members now instead of waiting. If they just take up room, it might be time to hand them down so someone new can appreciate them. One way to do this is to let your children or relatives decide what they would like. Give them sticky notes and let them go through what you’re wanting to pass down.
Go through the random stuff you’ve accumulated. If it doesn’t serve a purpose in this new phase of your life it can probably be let go. Donate these items to charity or hold a yard sale to make a little extra cash.
The term downsizing can be daunting and cast a bad light. But with retirement it really means having time to sort through your life, mentally and physically, and deciding what will suit you during the next phase of your life.
There are many choices when deciding how to invest your self-directed IRA. There are also rules that you need to be aware of before investing. Violating the rules on transactions prohibited in your self-directed IRA can make your IRA account subject to risks and penalties. These transactions are prohibited because they are considered as providing immediate financial gain to you or other disqualified persons.
A disqualified person includes the account holder, their spouse, descendants, investment advisors/managers and any corporation, partnership, trust, or estate in which the holder had a 50 percent or greater interest.
As a Self-Directed IRA holder, you may not:
- Borrow money from or lend to the IRA
- Sell, exchange or lease property to the IRA account or from the account to yourself
- Use the IRA as a security for a loan
- Transfer plan income or assets to disqualified persons
- Lend account money to disqualified persons
- Extend credit on their IRA to disqualified persons
- Furnish goods, services, or facilities to disqualified persons
- Allow fiduciaries to obtain or use the plan’s income or assets for their own interest
There are also prohibited holdings in a self-directed IRA. These include:
- Metals other than gold, silver and palladium bullion
- Alcoholic beverages and other tangible personal property as defined by the Secretary of the Treasury
There is an exception to the coin holding. Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins and certain gold, silver, palladium, and platinum bullion.
In general, a self-directed IRA account is extremely flexible, however, it is important to stay within the guidelines as the penalties can be significant. As one of the nation’s leading independent self-directed IRA and 401(k) administration companies, Mountain West IRA not only guides investors through the process of establishing a self-directed IRA account, but also ensures accounts are maintained to avoid prohibited transactions.