Retirees Can Start a Business While Protecting Financial Health
By Jim McKinley
Many retirees look for ways to supplement their income. Retired teachers serve as substitutes, retired coaches serve as umpires, retired policemen and women serve as security guards and so on. If you’re considering starting a business, know that you can do so while protecting your future financial health. Our tips will help you do so successfully.
However, before you decide to start your own business, keep in mind that it takes a lot of hard work and dedication. There are some important traits you must possess to get your business up and running, including the desire to take risks, the ability to solve problems efficiently and the drive to make a plan -- and stick to it.
Image via Flickr by 401(K) 2013
Talk to Your Accountant
For some retirees considering starting a business, you need to proceed with caution because you may earn too much money after your Social Security benefits kick in and cost yourself money. According to Zacks, Social Security and tax rules “can trigger benefit reductions or increase yur tax liability.” Knowing these rules and following them will help you plan your retirement finances so you can maximize your money.
One way to avoid costing yourself money is talking to an accountant when you are in the early stages of starting your business. Certified accountants know the tax laws inside and out, and they will help you make sure you know your income limits and explain your tax liability to you. The best accountant you can hire is one with a small business specialty.
Start a Business that Allows You to Set Your Hours and Fees
Retirement should be a time when you enjoy more freedom to read, exercise, travel, enjoy friends and family and do all the things that you didn’t have time for when you were working full time. That’s why retirees considering starting a business should choose one that allows you to set your hours and fees.
One profession that is gaining ground with retirees who want to start a flexible business is consulting. However, there are things to consider before beginning a consulting career. First, you need to have expertise in a certain industry and a respected track record. Then, you need to ensure you are a natural problem solver and decision maker.
You can decide whether strategy consulting or management consulting is best for you. Strategy consultants address how to beat the competition and increase profits, while management consultants focus on the process of developing and improving business strategies.
No matter which type of consultant you become, you have the power to determine how many hours you work per week and how much you charge. By controlling your workload and income, you can protect your free time and financial future. The other benefits of starting a consulting business include gaining satisfaction from helping others in your field, remaining a respected member of your field, taking advantage of continuous learning and challenging yourself daily by solving problems.
Create a Budget and Stick to It
When it comes to protecting your financial future as a new business owner, you need to make wise decisions. Begin by creating a budget and reviewing all costs. Try to determine how much money you project you’ll bring in monthly and determine your fixed costs. Then, add your variable expenses and project your one-time spends. Finally, bring everything together to create your monthly budget and use it to stay on track.
Avoid using your personal finances to get your business off the ground, unless your accountant recommends doing so as a write-off for your taxes. You also should determine whether a business loan, line of credit or credit card is the best solution for the capital you need to have a successful start. Continue working with your accountant to keep your business finances separate from your personal finances.
As a retiree, you can start a business and protect your future financial health at the same time. Start by talking to your accountant to determine whether you have income limitations and understand your tax liabilities. Then, consider starting a consulting business to enjoy the benefits of flexible work. Finally, create your budget and stick to it to ensure you don’t sacrifice your personal finances for your new business.