By Tashi McQueen
AFRO Staff Writer
tmcqueen@afro.com
Americans are increasingly turning to self-employment to live fulfilling lives, but the inconsistent nature of self-employment could make planning for retirement a significant challenge.
Felicia Gopaul, investor coach at Financial Control Mastery, and Dana Artzer, owner and founder of Arizona Insurance and Retirement Services, spoke with the AFRO on how self-employed individuals can save for retirement.
“The most common mistake the self-employed make is waiting until their finances smooth out before they start saving for retirement,” said Gopaul. “It can take a while until their business income starts to be predictable, and in the meantime, time is passing.”
According to a Pew Research Center analysis of government data in 2023, around 15 million U.S. individuals are self-employed, making up around 10 percent of U.S. workers. Black people make up 8 percent of America’s self-employed workforce.
Gopaul recommends self-employed individuals start saving for retirement wherever they are in their career journey and whenever they can.
“If you are unsure about your business income, start with a personal IRA (Individual Retirement Arrangement) or Roth IRA,” she said.
Gopaul explained that if needed, people can withdraw the amount they contributed without penalty through the Roth IRA.
“Once your income is more predictable, consider starting an SEP (Simplified Employee Pension plan),” she said. “It can be easy to start and easy to maintain. It allows you to put in a significant amount–up to $70,000 or 25 percent of compensation.”
Artzer stressed the importance of self-employed individuals ensuring they have enough money in their bank account to pay their bills before being overly concerned about retirement savings.
“You have got to have enough money to run your business and pay yourself,” she said. “If you’re on commission, like myself, your income–especially starting out–flip-flops. Sometimes you have a good week and sometimes you have a bad week.”
Still, she echoed the importance of saving early for retirement.
“People in their 30s don’t really think about retirement,” she said. “When you’re 30 and healthy, you can purchase a long-term care policy, and it would be inexpensive. The older you are, the harder it is to qualify for a long-term care policy.”
Alongside taking advantage of lower-cost long-term care opportunities, Artzer advised keeping retirement savings simple and sustainable.
“Don’t try and overdo it,” she said. “Be consistent and steady. Start off small and add more to your account as you grow.”
Great Job Tashi McQueen AFRO Staff Writer & the Team @ AFRO American Newspapers Source link for sharing this story.
