CHAPTER 21

The Best Retirement Plans for the Self-Employed

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For the self-employed, even if the will to save for retirement is there, the way can be problematic. If you’ve made the transition to being your own boss—whether as a freelancer, contract worker, or a small business operator—you probably need to ramp up a retirement account.

It’s easy to get tripped up on some of the things you took for granted when you worked for your old employer, for instance, a no-brainer, 401(k)-type retirement plan handed to you in a tidy package that didn’t require a lot of heavy lifting from you.

But once you’re out of that ready-to-go retirement plan, it’s really tough to get one started on your own. One of the biggest mistakes entrepreneurs make is not planning adequately—or at all—for their retirement.

This isn’t all that surprising. If you’re self-employed, it’s a squeeze to set the money aside, even if it is tax-deferred. There’s a fear that you may need those funds to keep things rolling if the business doesn’t grow the way you expect, or clients are lax on paying your invoices. What might be shaved off for a retirement savings account instead becomes your cushion to protect again cash-flow mishaps.

And if you’ve been focused on funding your start-up costs, it’s even more likely you have put retirement on the back burner. I wouldn’t be surprised if you tapped your existing retirement accounts ...

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