How much can a self-employed person leave for retirement?
However, the number of self-employed workers has been taken into consideration, this link opens a new tab.
Since 2000, more than half a million Quebecs have chosen to work for themselves. For them, retirement planning, especially with savings strategies, has its own unique challenges compared to salaried workers.
The absence of an employer also means that they do not have access to a pension or savings fund. Their money often serves as their initial capital, and sometimes even as their working capital, and they often direct their energy to the growth and profitability of their business.
However, having self-employment and savings retirement plans for later years is essential to better understanding this fact. Here are some important tips for self-employed workers who want to save for retirement.
1. When to save?
When they first start work, self-employed workers seldom prioritize retirement savings, instead of focusing on surviving until the next day and counting on growth in the medium term.
However, it is important to save as soon as possible! David Deckrey states at the outset that even when your business is up and running and you are well established, it matters every year, and even small amounts that are set aside on a regular basis can make a difference.
Also, for example, $ 100 savings per month for 20 years at a conservative rate of 5% would save about $ 40,000. And in 30 years, it will be worth $ 80,000.
Therefore, you double your capital in a period of 10 years! Save big or small, it’s important to invest your money as soon as possible using all the financial products available to you, such as RRSP, TFSA, Quebec Retirement Plan, and stock advertising.
2. What do you do if you have debts?
It is not uncommon for you to take on new debts or carry past debts when you are in business. They may tempt some to repay the debt in full before saving.
However, this can hurt you in the long run, the financial management expertise insists on distinguishing between good debt, such as a mortgage that is often associated with low-interest rates and a generous repayment period, and bad debt, which can have. has it. Relatively high-interest rates
David Dekry’s advisor is all about “repaying toxic financial products such as credit cards and personal credit lines that charge high-interest rates. “They cost you more than you get if you invest.”
In general, he suggests that you first pay for financial products with a profit of more than 10 to 12 percent as soon as possible, and then prioritize savings.
