Owning your own side business offers many perks… some financial, some less tangible. But, the benefits of entrepreneurship carry accompanying negative aspects. One of the most prevalent downsides is your potential savings for a retirement account. Many women in business do not take the time to set aside money for the future, as planning for retirement is simply not a priority.
Employers often offer retirement benefits, such as a 401(k). As an entrepreneur, no one will hand these benefits out to you. Even if you DO get benefits as a small business owner, there’s never any guarantee that they’ll pay out for you. It’s important to plan ahead and independently save money for your future retirement. If you’re wondering how to start your own business, you’ll want to learn about investment, too.
How Much Should Entrepreneurs Invest When Planning for Retirement?
In modern business articles, it’s estimated that you’ll need close to 80% of your income to live comfortably after you retire. That’s assuming you own a home and don’t need to worry about paying off a mortgage. A recent survey from MoneyTips estimates about 1 retiree in 100 withdraws about 5% of their retirement account every month.
So, how much do you need to save now for retirement?
- Let’s say your total income (between full-time work and any other business you operate) is $50,000 annually.
- If you divide that $50,000 by 5% (a “safe withdrawal rate” according to investment expert Jack Bogle), you’ll end up with about $1,000,000.
That means you’ll want to start your retirement with $1,000,000 invested if you want to maintain your current lifestyle. Seem like a lot of money? well, this is a good estimation of what you need to save now when planning for retirement.
Check Out ‘How Much I Need to Save for Retirement’ Calculator
Featured Image: Entrepreneurs must be responsible for saving for their own retirement. Use these planning for retirement tips to help. Image Source: Borderless News And Views