Retirement Saving as a Small Business Owner

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.

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Working After Retirement

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.

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Downsizing during Retirement

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.

Posted in Aging, Retirement, Saving money, Uncategorized | Leave a comment

Prohibited IRA Transactions and Holdings

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:

  • Collectibles
  • Metals other than gold, silver and palladium bullion
  • Gems
  • Stamps
  • Coins
  • 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.

Posted in Individual Retirement Accounts, IRA, Real Estate Investments, Self Directed IRA, Self Directed IRA Rules | Leave a comment