Small businesses and entrepreneurs need to consider what’s going to happen after they retire. A problem with entrepreneurs is that we’re all so focused on the present and the business that we forget – ourselves. Planning for retirement is harder for entrepreneurs because of the irregularity in our incomes in comparison to salary earners.
The first thing we all remember, when we talk about retirement is social security. Social Security is not secure. Social security is running negative for the first time in history starting – this year. We’ve all known for over 30 years that social security needs to be fixed, but we’ve delayed facing our demons. Thus, we’re now at the point where the problem is here.
But, it’s likely that this number will change to be lower in the future and the date you’re permitted to begin collecting social security will be later than you imagine. Entrepreneurs should expect social security to be around in the future and to provide a benefit, but it’s never going to be enough.
Social security was designed to be supplemental. It was not intended to be the sole source of income that would support your needs. The first step to planning for your retirement is remembering that you need to be able to sustain yourself without social security.
The most common form of healthcare available for retirees is “medicare.” The average cost for medicare is $7,620 dollars per year or $635 dollars per month for someone in good health. The cost becomes progressively more expensive for someone that is unhealthy. For example, someone with a heart condition will likely pay $12,012 per year or $1,001 per month. If you were to choose a private form of heath insurance, then it would likely cost more than medicare.
Housing will typically cost you either in the form of rent, mortgage or property taxes. The average mortgage payment is $1,030 dollars based on the US Census in 2015. The average rent is $1,059 dollars. If you own your home, then you’re still required to pay property taxes that are about $1,000 dollars a month. Many states will report their property tax rates without including the “school tax” portion. The school tax portion of your property taxes are always more expensive than the amount paid to the maintain the local government.