Many entrepreneurs and small business owners put off saving for retirement and plan to rely on future profits from selling their business. So, they prioritise putting money back into their business over saving for their golden years. As a group, they’re more desensitised to risk than most dental and medical professionals who rely on a stable income, but is counting on future profits really a solid retirement plan?
This does not constitute advice and advice should be sought in all instances before acting on it.
Prioritise yourself
The normal order of payments after taking a salary is:
- taxes,
- rent or mortgage (and bills),
- car payments, food, and entertainment.
Then if you have some left over, you might save it.
Consider flipping this order around and making retirement savings your first step. Without access to a state pension, entrepreneurs will need to seek out a private one so that they can reap the benefits. Have it set up to be deducted automatically if possible so you don’t need to worry about it each time you take a salary.
View your day differently
Consider breaking down your day by portioning time towards each aspect of your life. Take the first hour of your day and put it towards funding your retirement. Then you can focus on the three hours you’ll need to pay taxes, the next few hours to cover housing, and the final few to fuel your lifestyle.
If you work an average 9-hour workday, this means about 12% of your earnings will be put toward retirement. This is a step up from the minimum recommendation of 10% that should fund your retirement, but whenever possible, you should try to add even more to your pot, as typically, entrepreneurs and small business owners don’t tend to stop working when the clock strikes five.
Slow and steady
Rather than pin your retirement hopes on the sale of your business down the line, you should be taking the slow and steady approach. Investing even a few pounds a day, every day into a pension account. Choose an amount that’s so small you won’t even notice — the price of a cup of coffee perhaps — and over time you’ll reap the benefits. The earlier you start, the more you’ll be able to save. Before you know it, you’ll have decades of money stashed away all for your retirement.
Ready to start planning for retirement but not quite sure where to start?
Get in touch with us today so we can help you build a multifaceted approach toward saving for the future.
Want to be better prepared for retirement?
Investments | Financial Planning | Retirement | Save Tax | Protection |
Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.