We’ve talked about the various types of retirement plans for self-employed entrepreneurs. There’s no shortage of options – and the blooming marketplace of finance tools and apps like Robin Hood, Betterment, and Wealthfront means that entrepreneurs have no excuse for not saving towards retirement. You might love your job – but do you really want to be working on your final days?
The number one thing that is can help entrepreneurs reach an abundant retirement outcome is consistency. Because of the irregularity in income, it’s easy to decide to reduce contributions to your retirement nest egg, or skip it altogether – after all, that money would be best invested in the business, right?
Not so fast. I like to consider a retirement fund as the best form of insurance – it is something that protects you and will look out for you regardless of the success or failure of your business. Being self employed carries with it an implicit amount of risk, and building wealth for retirement helps reduce some of that risk exposure.
Proof is in the Pudding: Why Consistency Works
Why is consistency the key to retirement success? Because of the magic of compound interest. You’ve probably heard of the concept – but have you ever ran the numbers to see for yourself?
Take a look at this infographic – it’s an insightful example of how just $6/day (in this example, a daily coffee) can turn into a million dollars over a lifetime.
I know, I didn’t believe it myself, but I ran the numbers and it does add up. Of course, the investing and savings returns are not guaranteed, but there’s certainly an opportunity here.
Now that you’ve seen the power of compounding interest, are you ready to take action? Here are 3 things you can do, today, to be better prepared for your retirement:
– Setup an auto-transfer of money each month into an interest-bearing savings account. Even if it’s just $50, start putting money away. Out of sight, out of mind.
– Take 1 hour and research the many new investing tools and services on the market – I mentioned a few of them above. A lot of the services are free or very inexpensive, and don’t require huge minimum investments. Try the 1 service you like the most.
– Find a finance accountability partner. Tell them about your retirement goals and ask them to help you check in each month and share how you’ve stuck to your plans for building your retirement nest egg.