4 Easy Tips for Retirement Planning from Looma

retirement planning
Financial security is something everyone wants especially after they retire. But we need to think about retirement planning first. This will help us live happier days when we are no longer employed by someone or involved in a business. Studies show that an average American lives about 20 years of their life in retirement. Accordingly, preparing for retirement when you are still young and full of energy is the best option. Now that I might have convinced you that retirement planning is a must, let us see what you can do.

1. Keep your personal and business accounts separate

It might sometimes be difficult for an individual, especially a businessman to separate their business and personal accounts. However, this is a good thing to do especially from the perspective of tax planning. This roughly means paying taxes from your business account and saving money on your personal account.

2. Save for a rainy day or have emergency funds

You cannot do entire retirement planning if you do not have a simple emergency fund. An emergency fund is a money put aside in case of an emergency such as a job loss, a health crisis  etc.. Usually, this involves money that is enough to live on for a minimum of six months. In other words, your emergency fund should include all your basic living expenses.

3. Get rid of your debt

Just pay off that debt to be able to live in peace. Sometimes, you cannot manage to save for retirement along with paying a debt. Thus, it is often more reasonable to at least shrink your debt before you even start planning your retirement. Also, make sure not to get a new debt while paying off your credit card balance. Make sure you resist the temptation!

4. Save and again save money

Of course, trying hard to shrink the debt is a wise decision. However, do not forget about saving. Even some 10% of your monthly income can make a difference during your retirement. People also often try different retirement plans such as:
  • Solo 401(k) Contributions
This plan is designed for business owners and their spouses i.e. it covers them both. Solo 401(k) allows making up to 100% elective deferrals from earned income. The maximum annual contribution for the years 2015 and 2016 should be $18,000.
  • Simplified Employee Pension Plan
This plan is for the small and medium-sized business owners. It allows a contribution of up to 25% of the employee’s salary.
  • Savings Incentive Match Plan for Employees
This is another individual retirement account for business owners who have up to 100 employees. The owner should make a matching contribution of 3% for every eligible employee.

At the end

Managing your finances when it comes to retirement planning can sometimes be tricky. However, with flexibility, automation, and consistency you can get what you want in the long run. Work, plan, and save today, to enjoy life after you retire!

Also published on Medium.

4 replies
  1. victor ursan
    victor ursan says:

    Great advice for self-employed and for anyone approaching retirement age. This 4 steps you mentioned look easy at first sight but still require making a decision than developing the discipline to follow through. Thank you for highlighting the fact after retirement we are looking at 20 more years of life and preparation for those days needs to start in our younger days.
    Probably a retirement accountability system would be welcomed to help us building that needed nest egg.
    Thank you for raising awareness of the importance of taking action and solutions you recommend.

    Reply
  2. Andrew
    Andrew says:

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    Reply
  3. Lidia
    Lidia says:

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