Retirement planning can be a tedious task, and many people choose to avoid saving for retirement early in their career. They tend to wait until they are more financially stable before opening an IRA or funding their 401k; however, if you wait too long, you may not be able to retire comfortably. This is especially true for entrepreneurs, startup founders, and small business owners.
Business owners state a variety of reasons for why they don’t start saving for retirement. A lot of these reasons are untrue and are considered “retirement myths”. These myths play a large role in why they tend to avoid planning for retirement early on.
So what are some of these retirement myths?
Well, here are the 4 most common entrepreneurial retirement myths that many people believe are reasonable excuses to hold off on their retirement plans.
I’ll Start Saving Once My Business Is Stable
Many small business owners want to dedicate their time, money, and energy on growing their firm. Then, they want to have stable revenue flow before committing to finances outside of their business. Why? Because they all think they have plenty of time to save enough money for retirement. However, holding off on the retirement fund can have detrimental consequences.
Even if it’s only a marginal amount of money, entrepreneurs should start saving as early as possible. With a diverse portfolio and compound interest, your retirement savings will grow as time goes by. Furthermore, starting early will help compensate for any financial emergencies that may occur in your life.
That’s What Social Security Is For
Did you know that Americans who are over the age of 65 only receive 36% of their total income from Social Security? That’s nowhere enough for an individual to maintain their style of living. That’s why people can’t just rely on Social Security once they retire. It’s vital for individuals to develop another fund for retirement, so they don’t have to change their spending habits.
Whether it’s an IRA, annuities, 401k, pensions, or other savings, you must set aside another form of income for retirement. This is especially true for those trying to retire early since Social Security helps those who wait for their savings to increase. Hence, you’ll be able to dip your hand in other funds to support your financial needs, while your Social Security grows.
I’ll Sell My Business To Fund My Retirement
This is an idea that many entrepreneurs and business owners consider when thinking of retirement. Sorry to say that only 3% of entrepreneurs are willing to buy an existing business, so it’ll be quite difficult for owners to find a buyer.
Furthermore, there are plenty of risks that come with selling your firm as well. Market changes, loss of employees, recessions, and various other factors can lower the value of your business. Hence, you may not receive as much compensation for your firm, which will harm your finances in retirement. That’s why developing a retirement plan is crucial for business owners, so they have various backup options if they are unable to sell their business.
I Don’t Need To Retire
This is a common statement that many entrepreneurs have in the middle of their careers. Business owners who built their firm from the ground up find it difficult to let it go. The sentiment is understandable, but you never know how you will feel once you’re on the brink of that retirement age. That’s why it is better to be safe than sorry in terms of retirement.
Maybe you will fall ill, which will prevent you from working and deter your finances. By funding your retirement, you’ll have various ways to make up for financial shortcomings. Also, you will have the option to either retire from work or to keep working for your business.
Planning for retirement may be a hassle, but it is absolutely necessary to ensure that you will live a comfortable life after the age of 60. It’s best to start saving as early as possible, so the funds will slowly grow over time. The future is just as important as the present, and saving for retirement shows that you want to protect the security of your future.