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Fast Company
14 hours ago
- Business
- Fast Company
How to think about retirement if you don't have a traditional full-time job
Retirement planning is typically framed around full-time employment. 401(k)s or pension plans are attractive benefits for people in the corporate world. Those people can open their monthly statements and watch their retirement accounts grow steadily over time. But for the 16.8 million people in the U.S. who are self-employed (myself included), retirement planning looks different. Over the past two years, 1.4 million people have turned to self-employment. Whether that's due to layoffs, voluntary quitting, or other reasons, the number is steadily increasing—and there aren't a lot of resources available for people trying to figure out retirement planning on their own. While retirement is not something self-employed people can ignore, the whole concept of ending work on a certain date and drawing money from your retirement accounts may not be what some people have in mind. The traditional retirement model doesn't apply If you're self-employed, you know a lot of factors can make retirement savings tricky. Your income is irregular, you forego a 401(k) plan's employer match, and the process to make contributions might be more manual. When I first became self-employed a few years ago, retirement was something I started thinking about in the first year. However, I also spent more than 15 years working in the banking industry, so it was no surprise that finances were on my mind. I had to research a solo 401(k), figure out how to open the account, and start making contributions when I could. But as I've watched my little self-employed 401(k) grow over the years, I've also wondered: Am I even working toward the same retirement goal I had when I was working a corporate job? Or have my financial needs in retirement changed? Redefining a retirement lifestyle I've known many people in my life who have literally counted the days until retirement. They couldn't wait to stop working. By contrast, many self-employed people love their work—especially creatives. It's an integral part of their identities. I'm a freelance writer, so does retirement mean I . . . stop writing? It's hard to imagine. Retirement feels like a fuzzy concept. As self-employed people look into the future, retirement might look less like a 'full stop' and more like a 'slow down' or akin to 'selective work.' It may include passion projects, consulting, or mentoring—but not giving up work altogether. With this in mind, the retirement calculation is different. Rather than assuming you have zero income during retirement, you instead consider that you'd have less income. Planning for an undefined ending You won't have an office retirement party. No one will give you an engraved watch or clock celebrating your years of service with a company. (But, by all means, get yourself a gift!) Without a particular end date in mind, think instead of how you might step back—and at what age? It's important to intentionally plan what you want your next chapters to look like. Retirement for the self-employed requires more self-direction, but you also get to define your own path. You already did that once, when you started your own business. You can do that again as you plan for retirement.
Forbes
3 days ago
- Business
- Forbes
What Small Business Owners Need To Know About Filing And Paying Taxes
Lots of wage earners only file tax returns once a year. But small business owners, including the self-employed, have additional taxes to worry about–and possibly year round. While many wage earners only concern themselves with taxes on one day of the year, small business owners often have filing requirements all year round. In addition to income tax returns, you may be required to file and pay payroll taxes, sales and use taxes, excise taxes, and more—on the federal, state, and local levels. It's a lot to juggle. And while I'm a big proponent of having a team to help with tax matters, you should still be aware of what—and when—to file. Here's a quick summary of what you need to know. Most businesses will need an Employer Identification Number (EIN) — think of it as your business's Social Security Number. This number is what you'll use to open your bank account and file your tax returns. You typically need a new EIN when starting a business or if you change the structure of your business, such as converting from a partnership to a corporation. You don't typically need a new EIN if you merely change your business name or address. Additionally, sole proprietors or single-member limited liability companies that file taxes using Schedule C (on a 1040) and don't have employees or owe excise tax do not need an EIN. It's easy to apply for an EIN, and it's free. Some companies or professionals may charge a fee for obtaining an EIN for you, but this should reflect the time or service provided. The Internal Revenue Service does not charge a fee for an EIN. The fastest way to get your EIN is online directly through the IRS website. To apply online, your principal place of business must be located in the U.S. or its territories, and you must be the responsible party with a valid Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN). If you're a third-party designee, you must have a signed authorization (like Form 2848) to apply. You can also fax Form SS-4, Application for Employer Identification Number, to 855.641.6935 (for U.S. businesses). If you apply by fax and provide a fax number, the IRS will fax a cover sheet with the EIN back to you in four business days. If you don't have access to a fax machine, you can mail Form SS-4 to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. You'll get your EIN in about 4 weeks. If you were incorporated outside of the U.S. or U.S. territories, you cannot apply for an EIN online. Call the IRS at 267.941.1099 Monday – Friday, 6 a.m. to 11 p.m. ET (note that this is not a toll-free number) or fax Form SS-4 to 855.215.1627 (within the U.S.) or 304.707.9471 (outside the U.S.). Regardless of how you submit the application, you can apply for only one EIN per day. And while I know you're eager to get started, it's not a good idea to apply for an EIN until your business is legally formed. If you get your EIN early and have a change during the incorporation or organizational process, you may need to reapply. Once you have the EIN, you'll use the number for all business-related correspondence with the IRS. You'll also want to include your EIN on banking and financial documents to keep reporting requirements consistent. If, for example, you open a business savings account in your personal name using your personal Social Security Number, the bank will issue the 1099-INT in your name. The same applies to loans, investment accounts, and other tax-related activities. Failing to keep those numbers separate can lead to confusion at tax time for both you and the IRS. All businesses must file an annual return with the IRS, even if they did not generate a profit. Unlike individuals, there is no exemption for filing. For federal purposes, sole proprietors and single-member limited liability companies will file a Schedule C with their Form 1040 (as opposed to a separate return). The due date is April 15. For federal purposes, entities taxed as a partnership, including limited liability companies that have not elected another tax status, will file Form 1065. The due date for partnerships that follow a calendar year is March 15. For federal purposes, entities that have elected to be taxed as an S corporation will file Form 1120-S. The due date for those S corporations that follow a calendar year is also March 15. For federal purposes, entities taxed as a C corporation will file Form 1120. The due date for those C corporations that follow a calendar year is April 15. Depending on your business income for the year, you may need to make estimated payments. This requirement applies not only to individuals but also to corporations. Failing to make sufficient payments throughout the year can result in penalties and interest when tax time arrives, so it's important to plan ahead. If you don't need to make estimated payments, you'll pay when you file your return each year. When you own a business and pay employees, you are responsible for payroll taxes. The most well-known taxes, Social Security and Medicare, have a fixed rate. For 2015, the employer portion of the Social Security tax is 6.2% with a taxable wage base of $118,500 (wages over that amount are not subject to Social Security tax). The employer portion of the Medicare tax is 1.45%. There is no wage base limit for Medicare tax (in other words, all wages are subject to Medicare tax). As the employer, you are responsible for paying the employer share (6.2% for Social Security tax and 1.45% for Medicare tax) on behalf of your employees. You must also collect and remit the employee portion by withholding these amounts from your employees' paychecks. The rates are the same for both employees and employers (6.2% for Social Security tax and 1.45% for Medicare tax). Employers are also required to collect the Additional Medicare Tax of 0.9% on wages exceeding $200,000 for single filers and heads of household (it's $250,000 for married couples filing jointly and $125,000 for married individuals filing separately)—there is no employer match for this tax. You may also need to withhold federal income tax from your employees' wages. To figure that amount, ask your employees to complete Form W-4. You won't file the employee's Form W-4 with the IRS, but you do need to hold onto it for your own records. During each pay cycle, you will collect payroll taxes and deposit them with the IRS according to a schedule. This schedule is determined by the amount of money you collect and is typically monthly. You will also report those deposits to the IRS. This is where things can get a little confusing. It's not uncommon for your reporting frequency to differ from your deposit frequency. For instance, your business may be required to deposit payroll taxes on a monthly basis but report those deposits on a quarterly basis. Pay close attention to the due dates for both. Failing to report and remit payroll taxes can result in serious consequences. For example, a trust fund recovery penalty may apply. The penalty is 100% of the unpaid trust fund tax and may be imposed on those the IRS deems responsible for collecting or paying the tax. That means that the liability becomes personal (as opposed to a business liability) and isn't easily discharged. Even more serious? Those employers and responsible persons who fail to pay over trust fund taxes may be subject to criminal charges. Sentences can result in restitution and jail time. You can't outrun the liabilities either: Unpaid payroll tax liabilities typically do not disappear. If you close down your business or move away, those liabilities stay with you. Your business may also be responsible for paying Federal Unemployment (FUTA) Tax if you paid wages of $1,500 or more in any quarter during the year or if you had one or more employees for at least some part of a day in 20 or more different weeks during the year. The rate of tax for FUTA is 6% on the first $7,000 you pay to your employees during the year. You may be able to offset that amount with unemployment taxes you paid to a state. This isn't considered a proper "payroll tax" since this tax is only paid by employers, not employees. If you are a sole proprietor or have no employees, you are responsible for the Self-Employment tax (SE). In a typical employer-employee relationship, the employer pays a portion of Social Security and Medicare taxes, and the employee pays a corresponding portion. When you work for yourself, there's no employer to pay the employer portion, so you have to pick up both sides of the cost through the SE tax. Generally, you must pay SE tax if your net earnings from self-employment were $400 or more. Special rules may apply to those who work for churches, government employees, and others (check with your tax professional if you're not sure whether special rules apply to you). Excise taxes may also apply if you perform certain kinds of services or manufacture and sell certain goods. This generally includes 'sin taxes' (such as those on alcohol and tobacco) as well as fuel taxes, air transportation taxes, and other taxes. While I'm generally focusing on federal taxes, be aware that state and local tax obligations may also apply to small businesses. In addition to income and payroll taxes, many state and local authorities impose sales and use taxes. Just five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) don't have a state sales tax. Sales tax is a tax on the exchange, sale, or transfer of goods and services—exactly how much tax is owed and on which products is determined by state or local law. Sales taxes are typically added to the sales price at the register or checkout and are paid by the consumer—this is also true for online sales. The business that collects the tax is responsible for filing the appropriate tax returns and remitting the tax to the appropriate taxing authority. Not only can managing your tax picture take up a lot of time, but the complexity can sometimes feel overwhelming. A good tax professional can assist you with preparing, filing, and paying your taxes. I highly recommend small businesses find a reliable payroll company. While larger companies may have in-house resources to handle payroll accurately, small businesses often do not. A dependable payroll company will collaborate with you to ensure that your employees are paid on time and that the correct amount of taxes is withheld and remitted, including federal, state, and local taxes. A good payroll company will also ensure that the proper amounts are withheld for other pre-tax benefits, such as health insurance and retirement plans. Typically, payroll companies charge a flat fee plus a per-employee fee. The amount depends on the complexity of payroll, including whether the payroll company also administers benefits. Even when you use a payroll company, remember that your business is still on the line with the IRS and other tax officials. Opt for a reputable company and ensure it's bonded and insured. Once you find one you like, pick up the phone and schedule a meeting to discuss your options. You don't have to wait until December to get started—with today's software, there's generally a quick turnaround to get started (no more waiting until the beginning of the year). If all of this seems rather intimidating, it is. That's why I recommend working with a team to keep your taxes straight. And if you're already behind on your taxes? Don't despair. It's fixable. Take a deep breath and contact a good tax attorney.
Daily Mail
30-05-2025
- Business
- Daily Mail
How to get a mortgage: From applying for a decision in principle to getting an offer
Buying a new property, getting a mortgage and remortgaging are all huge financial decisions. They involve a number of different steps and a host of parties, including solicitors, estate agents and mortgage brokers. What's more, some of the steps are different depending on whether you're taking out a mortgage to purchase a property, or remortgaging and negotiating a new deal. This guide helps to demystify the process. From getting a mortgage in principle before searching for a property, to the documents you need when applying for a mortgage or remortgaging, we explain what you need to do. We also consider how to get a mortgage in various circumstances, including when you're a first-time buyer, are self-employed or are looking for a buy-to-let mortgage. It's always a good idea to compare mortgage rates to find out what deals may be available. Before you start your property search: Get a mortgage in principle If you are buying a home, the first step towards getting a mortgage usually involves applying for a mortgage in principle. This is also known as an agreement in principle or decision in principle, and it indicates how much a mortgage provider might be willing to lend you, based on information that you provide. You don't need to know the property you'd like to buy to get a mortgage in principle. In fact, doing this before ramping up your property search helps you narrow your focus on homes that you can afford to buy. It also shows you're serious about buying. But this won't be locked-in – even if the lender agrees to a mortgage in principle, there's no guarantee it'll actually offer you a mortgage when the time comes. You can apply for a mortgage in principle directly with many lenders online or in branch. Alternatively you can speak to a mortgage broker or adviser who should be able apply for a mortgage in principle for you. To get one you'll need to give the lender or mortgage broker your details including information about your income and outgoings. It should only involve a soft search of your credit file, which doesn't affect your credit score. This is Money's partner L&C can give you a free mortgage in principle. Enter your details and find out how much you could borrow in a matter of minutes. What if your mortgage in principle is declined? The lender might refuse your mortgage in principle for a few reasons, including if it thinks: you won't be able to afford the mortgage repayments you don't have a large enough deposit you have a poor or limited credit history Lenders look at your credit history to work out the risk of you not being able to repay the money. If you've struggled to meet your credit obligations in the past or are in significant debt, you'll probably find it difficult to get a mortgage in principle, and therefore a mortgage, from a mainstream lender. In this situation it's best to request a free credit report from the credit reference agency (or agencies) the lender used to check your credit file – the lender must tell you which it used when you ask. You can scour your report for areas to improve, for example registering on the electoral roll. You should also double-check the lender's criteria to make sure you meet them. If there's an element you fall short on, another lender may be more suited to your needs. New home: Once you have had an offer accepted, it is time for your full mortgage application Once you've found a property: Apply for a mortgage When you've found your ideal home and had an offer accepted, it's time to apply for a mortgage properly. If you're applying for a mortgage from the same lender that gave you a mortgage in principle, you should be able to retrieve the application and continue from there. There's no obligation to use the same lender that gave you a mortgage in principle. But if you do go with a different mortgage provider, it may ask you to complete a new mortgage in principle before you apply. What documents do I need for a mortgage? Knowing what documents the lender will ask for can speed up the mortgage application process. You should be prepared to show: photo ID such as your passport or full UK driving licence proof of residency or nationality if you've moved to the UK from a different country the last three to six months' worth of bank statements (the lender may want to check your regular outgoings) proof of income (such as payslips or your tax year overview if you're self-employed) evidence of your deposit (bank statements, or if your deposit's a gift you may need to fill in a form to prove you're not expected to pay it back) P60 tax statement Do you need a mortgage broker to apply for a mortgage? You don't need to use a mortgage broker when applying, but they can find the best mortgage deals for your situation and speed up the application process. While some brokers don't charge fees, others do. Make sure you understand fees before proceeding and compare a few different advisers before going ahead. If you have more specific needs, for example you're self-employed or have been turned down for credit in the past, a broker can help you find the best deal for your situation. The terms mortgage broker and mortgage adviser are often used interchangeably. They generally refer to the same type of service – someone who advises you on your options, including how much you can borrow, and searches the market for deals relevant to your situation. But make sure you know which type of adviser you're dealing with. Some advisers will only look for mortgages from a specific lender or group of lenders, or have a more restricted range of products they can recommend. These are often employed by the lender itself. Other advisers can search for the best deals from a wider range of providers. This is the type of adviser that's probably best to engage – look for brokers that describe themselves as independent or whole of market. What type of mortgage can you apply for? You can go for a fixed-rate mortgage, which fixes your interest for a set time, often two or five years. A variable mortgage on the other hand means that your interest can move up and down. Also consider fees and your options for the term – a longer term means your monthly payments will be lower, but you'll pay more interest overall. How long does it take to get a mortgage? It typically takes between two and six weeks for a lender to process your application and offer you a mortgage. But there are lots of factors that affect how long it takes to get a mortgage, including: Your preparedness: do you have all your documents together, such as your passport, bank statements and utility bills? Whether you're using a mortgage broker: mortgage brokers and advisers can make the application process quicker - but check whether they charge fees. The lender's checks: the lender needs to check your credit history in full, your affordability and whether the property is worth the amount you're buying it for. Whether the lender needs more information: the lender may ask for more documents or details before deciding on your application. The type of property involved: Some properties, such as leasehold flats, may require a longer mortgage process as the ownership structure is more complex Each mortgage application is different, which accounts for the wide variation in the time you can expect yours to take. How long does a mortgage offer last? A mortgage offer usually lasts for between three and six months. It depends on the lender so make sure you check. Once you've got an offer you can move on to the next stage of the process, which involves your solicitor carrying out legal checks on the property. Remortgaging: Switching to a new deal at the end of your fixed term Many people choose to fix their mortgage rate for a number of years, commonly two or five. When this comes to an end, they will need to switch to a new deal otherwise they'll fall onto the mortgage provider's more expensive standard variable rate. You can find a new deal with your existing lender, but you may be able to find a better one elsewhere so it's important to compare all your options. Switching to a new deal with your existing lender is called a product transfer, while going with a new provider means remortgaging fully. This involves many of the same steps as taking out a mortgage initially, including affordability checks and property valuation. How to find the best mortgage rates To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's online Mortgage Finder will search 1,000's of deals from more than 90 different lenders to discover the best one for you. You can get a free mortgage in principle, find out how much you can borrow and see which rates you might qualify for. > Find your best mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. Getting a mortgage in different situations: First-time buyers, home movers and more Here's an overview of getting a mortgage in different circumstances. A great way to find your best deal is by comparing mortgages. How to get a mortgage as a first-time buyer First time buyers can find it difficult to save for a deposit and their options are often restricted by what lenders are willing to let them borrow. First time buyers should look at these options when getting a mortgage: Lifetime Isa: this helps you save for a deposit quicker. You can put up to £4,000 a year into the account and the Government tops your contributions up by 25 per cent. Keep in mind you can only use the money to buy your first home or for retirement – you'll pay a penalty when withdrawing for other reasons. You will also pay a penalty if you use it to buy a home that costs more than £450,000. You can only open an account if you're under 40 and you must hold it for at least 12 months before you can use the funds to buy a home. Low-deposit mortgages: typically first time buyers need a deposit of at least 10 per cent but some providers now offer 5 per cent deposit mortgages. Products like this usually have higher interest rates and there's risk involved with borrowing a larger amount – for example, the value of your property could drop below the value of your mortgage. This puts you in negative equity, meaning your property would be worth less than what you owe. > What you need to know about getting a mortgage as a first time buyer How to get a mortgage as a home mover Your options are more complicated when you're moving home. You can sometimes choose to 'port' your existing mortgage to a new property. This allows you to keep your current deal, but not all mortgages can be transferred like this. Your available options will depend on whether your new home is cheaper or more expensive than your current one. For example, lenders can be reluctant to port a mortgage if you need to borrow more when upsizing. Otherwise, you can settle your existing mortgage and take out a new one. This can be beneficial if there are more competitive mortgage deals available, but you should take early repayment charges into account. These are likely to be due when exiting your current mortgage before the end of the term. > Can you afford a bigger home? What upsizers need to know How to get a mortgage when self-employed The self-employed need to give mortgage providers more proof of their income than employed workers, who usually just need to provide their last three payslips. In addition to documents such as your photo ID, utility bills, evidence of deposit and bank statements, the self-employed should be prepared to give: certified accounts of two or more years from a qualified accountant form SA302 from your tax return documents that support the information about your income in form SA302 These requirements can make it more difficult for the self-employed to get a mortgage, especially those who are newly self-employed. But the mortgage application process is the same whether you're employed or self-employed. There aren't specific self-employed residential mortgages for those who run their own business. A mortgage adviser can talk to you in more detail about getting a mortgage as a self-employed person. How to get a buy-to-let mortgage Buy-to-let mortgages are different products to residential mortgages and so have different requirements and application processes. They're usually interest-only, so throughout the length of the mortgage you only make interest payments before repaying the loan in full at the end of the term. To get a buy-to-let mortgage you'll often need to: have a deposit of at least 25 per cent of the property value show how much rental income the property can receive (usually lenders want to see it can earn at least 125 per cent of what you pay on your mortgage each year) own a property already give evidence of earnings outside of rental income be under the maximum age requirement (for many lenders this is 75) If you're interested in a buy-to-let mortgage, the rules can be complicated, so it helps to have an adviser explain everything for you. > How to invest in buy-to-let property – and other buy-to-let tips
Entrepreneur
29-05-2025
- Business
- Entrepreneur
Not Your Parents' Retirement: Smart Strategies for a New Era
In the past, retirement followed a predictable script: work 40 years, collect a pension, claim Social Security, and coast through your golden years. However, that formula is now considered outdated.... This story originally appeared on Due In the past, retirement followed a predictable script: work 40 years, collect a pension, claim Social Security, and coast through your golden years. However, that formula is now considered outdated. In the modern world, professionals face a vastly different landscape, particularly entrepreneurs, freelancers, and self-employed people. With longer lifespans, volatile markets, shifting job models, and disappearing pensions, retirement is a thing of the past. The good news? The retirement plan your parents had is not the only option you have. Using the right strategies can create a more flexible, individualized, and resilient retirement plan. To prepare for the future, you must think differently — and smarter. 1. Rethinking retirement age: The evolving end game. Despite its traditional status, the retirement age is rapidly losing relevance. We are living longer, living healthier lifestyles, and often working well into our 70s, sometimes out of necessity, sometimes by choice. Entrepreneurs, in particular, often blur the distinction between 'working' and 'retired,' often reducing their involvement gradually rather than completely withdrawing. Strategy: Rather than rigidly defining when all work must cease, consider a more fluid transition. Consider ways to gradually reduce your working hours, pivot into consulting roles, or create passive income streams that supplement your income. In addition to easing financial strain, this phased approach retains a sense of purpose and structure in your life, both essential ingredients for sustained mental and emotional health as you age. 2. Building income instead of saving for a nest egg. Our parents often relied on pensions, Social Security benefits, and accumulated savings for their retirement. However, due to today's economic climate, pensions that were once commonplace are becoming rare, and the long-term stability of Social Security continues to be debated. Although substantial savings are undoubtedly beneficial, they don't guarantee a steady and predictable income. As a result, a modern approach to income planning is required, strategically ensuring that a reliable and consistent flow of income comes in each month to cover living expenses. Strategy: Identify and analyze income-generating assets and strategies. This could include buying annuities that guarantee income, building a portfolio of dividend-paying stocks, buying rental properties that generate passive income, or even monetizing intellectual property to earn royalties. Ideally, your assets should be structured in a way that can replace your regular paycheck once you transition out of active employment. 3. Annuities as a tool for income stability. Often, annuities have a negative connotation because they are marketed aggressively or viewed in a misunderstanding of their proper application. In retirement, however, they can serve as a powerful tool for income stability, especially for those who lack the security of a traditional pension. Strategy: Invest in annuities like fixed indexed and immediate annuities to ensure you are protected from outliving your savings. In this case, seeking guidance from an unbiased, trusted financial advisor who can properly explain how (and if) annuities fit with your financial situation is crucial. 4. Embracing flexibility and diversification for agility. Historically, our parents' generation has placed most of their retirement savings in a pension fund or relied heavily on employer-sponsored plans. In today's dynamic economic environment, however, true retirement security largely depends on diversification and adaptability. Rigid, one-sided retirement plans can be thrown off by market fluctuations, inflationary pressures, and unforeseen economic shocks. Strategy: Consider a diversified portfolio of financial vehicles. This includes traditional retirement accounts, taxable investment portfolios, real property, and readily accessible cash reserves. To maintain a sense of flexibility within your portfolio, allocate some assets to liquid accounts to meet immediate needs, others to growth-oriented investments to generate long-term appreciation, and the remaining to income-generating investments. An agile and well-diversified overall strategy is better equipped to weather economic storms and adapt to market changes. 5. Don't underestimate the cost of healthcare. Healthcare is one of the most significant and unpredictable variables in modern retirement planning. In contrast to previous generations, today's retirees will likely have to navigate the complexities of Medicare and private insurance on their own. Although Medicare covers most medical expenses, including long-term care, healthcare costs continue to increase annually. Strategy: Be proactive when it comes to planning for future healthcare expenses. If you are eligible, consider a Health Savings Account (HSA). Additionally, consider long-term care insurance if your financial situation is secure and your risk tolerance is high. It is especially important to include realistic estimates of your future medical expenses when you are planning for retirement. If you fail to include this category in your retirement planning, you can seriously undermine your retirement income. 6. Redefining retirement: Keep earning, keep engaging. Today, retirement does not necessarily imply a complete cessation of income-generating activities. An increasing number of retirees are choosing to work part-time, pursue fulfilling careers in their 'second acts,' or turn lifelong hobbies into small businesses that generate income. In addition to relieving potential financial strains, continued engagement creates a sense of purpose and structure crucial for overall health in later life. Strategy: Take advantage of opportunities to capitalize on your existing expertise through freelance consulting, the development of online courses, or public speaking. In addition, consider investing in low-maintenance business models that can provide passive or semi-passive income streams, such as blogging, renting spare rooms, or REITs. By doing this, you can generate revenue without spending much time. 7. Use technology as your financial ally. Our parents likely relied on traditional financial advisors and paper-based bank statements during their lifetime. Today, you can access a wealth of real-time financial data, sophisticated robo-advisors, and AI-driven investment platforms at your fingertips. As such, utilize technological advances to your advantage. Strategy: Use budgeting tools like You Need a Budget (YNAB) and Mint to learn more about your spending habits. Also, use an investment tracking platform like Empower to monitor your portfolio performance. Using a reputable robo-advisor such as Betterment or Wealthfront could simplify and automate your investment management. The key to success is keeping informed and in control of your financial landscape without being overwhelmed. 8. Invest according to your stage, not just your age. Traditional financial advice suggests subtracting your age from 100 and allocating stocks as a percentage of your portfolio for asset allocation. Despite its simplicity, this approach is often inadequate in today's nuanced financial world. It is far more important to evaluate your risk tolerance, retirement income needs, and time frame before you need to access your funds. Strategy: Work with a qualified financial planner who can create a dynamic asset allocation strategy tailored to your specific circumstances — one that will intelligently adjust over time as your financial condition and stage of life changes. Compared to traditional retirees with a shorter time horizon, entrepreneurs who plan to remain active in their businesses may be able to allocate a larger portion of their portfolio to growth-oriented investments. 9. Planning for taxes in retirement: The taxman cometh. It is a common misconception that income taxes will automatically decrease in retirement. However, this isn't always the case. You may find that your taxable income is higher than you expected because of Required Minimum Distributions (RMDs) from tax-advantaged retirement accounts, Social Security taxes, and capital gains taxes on taxable investments. Strategy: During your working years, diversify your investment portfolio by contributing to pre-tax accounts (401ks), Roth accounts (after-tax contributions with tax-free growth and withdrawals), and taxable accounts. If you are in a lower income bracket, consider strategic Roth conversions to reduce your tax burden in retirement. The more you earn or withdraw, the less you get to keep after taxes, so you should always consider taxes when planning your retirement withdrawal strategy. 10. How to define true wealth: Beyond monetary wealth. One of the most significant departures from our parents' traditional retirement mindset is the evolving understanding of success in later life. Many retirees today seek more than a symbolic gold watch and a golf club membership. For them, freedom, purpose, and the ability to live according to their rules are paramount. Strategy: You should design your retirement plan according to your core values and aspirations. Some might do this by traveling the world, while others might book more time with family, volunteer, or mentor the next generation. In financial planning, you're not just trying to accumulate a certain amount of money but to fund the life you desire. Final Thoughts: Embracing the Retirement Revolution The concept of retirement has changed. It's no longer a destination—it's a transition, and as such, the rules have changed. Rather than chasing outdated retirement goals, develop a plan that fits your values, working style, and long-term goals. Whether you are planning your exit strategy, building a business, freelancing, or have worked 25 years, the right retirement plan is proactive, flexible, and deeply personal. Ultimately, you don't need to retire like your parents. The truth is, you probably shouldn't. Instead, you must think smarter and differently. FAQs Why is retirement today different from our parents' generation? Longer life expectancy, a decline in traditional pensions, increased individual investment responsibility (such as 401ks), fluctuating economic conditions, and evolving healthcare costs all contribute to this shift. What are some of the biggest financial challenges facing people planning for retirement today? Key challenges include outliving savings, managing healthcare expenses, navigating market volatility, and dealing with potential inflation. How has the shift from defined benefit (pension) plans to defined contribution (401(k)) plans impacted retirement planning? Due to this shift, individuals are responsible for saving and managing their retirement funds effectively, requiring more financial literacy and proactive planning. What alternative or less traditional approaches to retirement are people exploring today? In retirement, some people consider phased retirement, working part-time, creating passion projects that generate income, and even relocating to lower-cost areas. What's the first step someone should take if they feel overwhelmed by retirement planning? As a first step, people should evaluate their current financial situation, including their income, expenses, debts, and savings. The next step is to set clear retirement goals. Image Credit: Pavel Danilyuk; Pexels The post Not Your Parents' Retirement: Smart Strategies for a New Era appeared first on Due.
Associated Press
28-05-2025
- Business
- Associated Press
PensionBee Launches SEP IRAs To Include Non-Traditional Retirement Savers
NEW YORK--(BUSINESS WIRE)--May 28, 2025-- PensionBee, a leading online retirement provider, announced today the launch of Simplified Employee Pension (SEP) IRAs in its digital platform. This offering provides a best-in-class retirement solution designed for self-employed individuals. The launch comes at a critical time as the gig economy continues its rapid expansion. By 2025, gig workers are expected to make up nearly 50% of the U.S. workforce. This structural shift in employment patterns has created an urgent need for retirement solutions tailored to non-traditional workers, as traditional employer-sponsored retirement benefits become inaccessible to a growing segment of the workforce. Self-employed Americans consistently report lower levels of retirement preparedness. Only about 13% of self-employed individuals in single-person businesses participate in retirement plans, compared to nearly 72% of traditional employees. Fewer take advantage of SEP IRAs, highlighting a significant opportunity gap. 'Pursuing your passions should not come at the expense of future retirement security,' said Romi Savova, CEO of PensionBee. 'The addition of SEP IRAs to our platform allows us to empower self-employed Americans who may not have access to traditional retirement plans. Everyone deserves to plan for and enjoy a happy retirement.' Unlike traditional employees, self-employed Americans lack access to employer-sponsored retirement plans, automatic enrollment, and employer matching contributions that typically boost retirement readiness. This structural disadvantage affects millions of entrepreneurs and independent contractors who represent a growing segment of the American workforce. In response, self-employed individuals are more likely to claim Social Security early, potentially reducing lifetime retirement income. Beyond individual benefits, PensionBee's SEP IRA offering addresses a critical economic need. Small businesses represent over 99% of all U.S. businesses and create approximately two-thirds of new jobs. Despite this, reports show that one in five small business owners don't have any retirement savings, and the majority have saved less than $50,000. By providing modern retirement solutions for single business owners, PensionBee not only supports individual financial security but strengthens the economic foundation of American entrepreneurship. PensionBee's SEP IRA allows individual account owners to contribute up to 25% of their income, significantly higher than Traditional IRA limits, creating a powerful vehicle for retirement wealth accumulation. This higher contribution ceiling enables entrepreneurs to make up for periods of variable income and accelerate their retirement savings during profitable years. PensionBee's SEP IRA offers a complete solution for self-employed individuals: The SEP IRA offering is available immediately to all self-employed individuals and single business owners. PensionBee users can begin the setup process now with dedicated BeeKeepers available to guide them through account creation. The addition of SEP IRAs represents a significant milestone in PensionBee's mission to democratize retirement planning for all Americans, regardless of employment status. The company plans to continue expanding its offerings to address the evolving needs of today's diverse workforce, with additional features and educational resources specifically designed for self-employed savers planned for later this year. PensionBee's SEP IRA is the latest addition to a robust offering of retirement account types, including Traditional, Roth and Safe Harbor IRAs. For more information about PensionBee's SEP IRA offering, visit View source version on CONTACT: Media Contact: Adela McVicar [email protected] KEYWORD: NEW YORK UNITED STATES NORTH AMERICA INDUSTRY KEYWORD: PROFESSIONAL SERVICES BUSINESS APPS/APPLICATIONS TECHNOLOGY SOFTWARE FINANCE INTERNET SOURCE: PensionBee Copyright Business Wire 2025. PUB: 05/28/2025 09:14 AM/DISC: 05/28/2025 09:13 AM
