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SALT LAKE CITY — Saving money for retirement can be tricky enough for anyone, but recent reports show it's especially hard for the self-employed.
USA Today reports 40 percent of self-employed people are not saving regularly, and 28 percent are not saving at all. The same-report shows that 83 percent of the people who do set money aside for the future occasionally have to cut back when the obstacles of owning a business get in the way.
"Small business [owners] tend to put money back into their business and try to make their business grow, and that's good," said investment coach Bill Mullen. "But some of their earnings need to go to a retirement account of some kind."
Mullen says a lot of the self-employed people he sees feel they can't afford to put any money away for the future. But he says these people can't afford not to save.
"One day, a check is not going to be coming in. Or, cash is not going to be coming into a business," he said.
There is no specific percentage of how much business owners should be saving, but Mullen says there are programs that are especially good at helping self-employed people save. He recommends a solo 401(k).
- Save systematically
- Get help if you need it
- Find a plan that meets your needs
- Reduce debt
"It works just like a 401(k) does for a large business, but the expenses of opening it and keeping it going are very, very low. There are hardly any expenses at all," he said.
He says, as a sole proprietor, the self-employed person is recognized both as the employer and the employee for the solo 401(k).
If the person isn't able to contribute to that kind of program, Mullen says there is something else they should be doing.
"If you're self-employed and not saving any money, in my opinion, a Roth IRA is the absolute minimum you should be contributing to as a retirement plan," he said.
