The Great Recession made many business owners wonder if they will ever retire. During the past few years, they have seen their retirement investments sink by as much as 40 percent and the value of their homes by as much as 75 percent in some parts of the country. At the same time, their two largest expenses—health care and college tuition—continue to rise at 5 to 10 percent each year. With bank interest rates hovering around 1 percent, there is no safe and consistent way to grow retirement savings quickly. Gone are the days of 8 percent interest where money doubled every nine years. Now at 1 percent interest, the same money will take 70 years!
Retirement does not have to be a thing of the past
With correct planning over the next 10 to 20 years, there are still seven ways to make it easier for you to retire:
1. Find the leverage in your business
Your business needs to be about more than just you. Don’t just build yourself a job, build something that works and profits without you being there. In this way, you will also build an asset that can be sold to a strategic buyer for a large gain.
2. Send your children to a state university
College tuition may be one of the biggest costs ahead for you, so keep the fact that state schools are sometimes 25 to 50 percent less than private schools in mind. If you can’t qualify for financial aid through proper planning (read Paying for College Without Going Broke), work on getting an academic or athletic scholarship. Contrary to popular belief, colleges where your child has been accepted can be bargained with, so never spend your 401K retirement money—borrow if needed since banks don't loan money for retirement!
3. Buy cheap real estate
Yes, the value of your real estate has gone down, but now is the opportunity to buy at a retirement location to offset your losses.
4. Pay down credit card debt
This is the best return that can be made by a small business owner. Paying the minimum $120 a month to pay off a credit card debt of $10,000 at 18 percent will take 10 years. Accelerate your payments and cut your interest paid drastically. Financing your business through credit cards rarely pays off.
5. Long-term health care
This is important so you don’t spend your savings in the last few years of your life on medical bills—which may not be covered by ordinary health insurance.
6. Forget about keeping up with the Joneses
There will always be someone smarter, better looking and richer than you. Think about what you really need and save the rest. Don’t fall into the trap of “living larger” as your business becomes more successful.
7. Plan a post retirement career
With so many freelancers and part-time people filling the workforce today, plan a part-time post-retirement career for additional income and health benefits. This can include teaching, writing, speaking or consulting.
Have you set a date by which you will retire? How will you do it?