If you’re a small business owner, chances are you branched out on your own for a better quality of life; the opportunity to be your own boss. To do something you are passionate about, and live life the way you want to. However, many small business owners get caught up in the here and now, and don’t pay enough attention to the future, like planning your retirement.

Record numbers of people in the UK are branching out on their own – the Office for National Statistics (May 2016) says the total figure is now just under 4.7 million – but there is a fear among the financial planning community that this is leading to a ticking clock when it comes to retirement planning.

Planning for your retirement to be as great as your business life is very important, and it’s never too early to start preparing for later life. Whereas employed people are now being automatically enrolled into a workplace pension scheme, whereas self-employed people and single company directors are exempt from this government initiative.

What is the best retirement saving plan when you’re self-employed?

If you work for yourself or run your own small business, it is a good idea to start a personal or stakeholder pension plan.

Ideally, you want to save at least 10% of your earning each month, however that is not always realistic for self-employed people – so aim to build up your savings towards this 10% per month figure. Even if you’re just starting out on your own and money is tight, or your income fluctuates from month to month, put a small amount away every month to help fund your retirement.

Another useful option is to use the National Employment Saving Trust (NEST), a trust-based workplace pension scheme that is suitable for most small business owners.

Even if your ambition is to grow and sell your business in order to fund your retirement, it is important to have a ‘plan B’ in case the situation changes.

What is the cost of not saving for retirement?

Chances are, you became your own boss to enable a better quality lifestyle. Putting pension contributions out of your mind can have a significant impact in later life. For example, without making your own savings for retirement, your income will be limited to state pension contributions, which will only cover the basic amenities. You probably won’t be able to continue living your current lifestyle in retirement.

It seems a shame to spend your whole life working hard and earning good money, only for you not to have the financial security to enjoy the time after the hard work has been done.

To avoid becoming one of these people, it is a good idea to look into a suitable pension plan as soon as possible. If you are not feeling confident about making that decision by yourself, make an appointment with a professional financial advisor.

An advisor will be able to give you expert, independent advice on the options available to you. They will also help you to find the most competitive deal, to give your pension scheme the best possible start.

Speak to a self-employed financial planning specialist

If you’re unsure about how to plan for your retirement or need to set up a workplace pension, contact our financial planning team today.

Investments and the income from them may go down as well as up and you may get back less than the amount you invested. Past performance is not a guide to future performance.

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