Self-Employed Retirement Planning: How to Secure Your Future
Self-Employed Retirement Planning: How to Secure Your Future
Securing your future might feel daunting when you’re self-employed. Without an employer-backed pension plan, you’re the one in charge of your retirement savings. But with the right approach, you can take control and build a secure, stress-free future. It’s easier than you think — all it takes is the right planning and guidance.
Why Retirement Planning Is Important for Self-Employed People
Many self-employed people focus on their business needs rather than planning for the future. This makes sense because running a business takes a lot of time and effort. However, without a clear plan, you might not have enough money to live comfortably when you stop working.
Unlike regular employees, you don’t automatically pay into a pension fund. If you don’t save consistently, you could face money problems in retirement. Self-employed people often have ups and downs in their income, so it’s important to have a plan that helps you save for retirement, even when you earn less.
Understanding Your Retirement Savings Options
Luckily, there are several ways self-employed people in the UK can save for retirement. Knowing these options will help you pick the best one for your financial goals and lifestyle.
Self-Invested Personal Pension (SIPP)
A popular choice is a Self-Invested Personal Pension (SIPP). A SIPP gives you full control over your savings, allowing you to invest in options like stocks, bonds, and property. You also get tax relief on your contributions. For every £80 you save, the government adds £20 in tax relief if you are a basic rate taxpayer.
Lifetime ISA (LISA)
Another option is the Lifetime ISA (LISA). If you are under 40, you can save up to £4,000 each year and get a 25% bonus from the government. While LISAs are mainly for first-time homebuyers, you can also use them to boost your retirement savings after age 60.
Personal Pensions
If you want a flexible option, Personal Pensions from different providers offer lower-cost plans with managed investment portfolios. These pensions are easy to set up and manage, making them a good choice for busy entrepreneurs and freelancers.
Read more: Pension or ISA: Which is Better for Retirement Planning?
How Much Should You Save as a Self-Employed Person?
Working out how much to save for retirement can be tricky, but a simple guideline is to aim for a pension that is 10-12 times your yearly income. For example, if you make £35,000 a year, you should aim to save between £350,000 and £420,000 to have a comfortable retirement.
Another way to approach saving is by setting aside a percentage of your income each year. Experts suggest saving at least 15% of your yearly earnings, though this amount may change based on your age and current expenses. Starting early and saving regularly, even small amounts, can make a big difference because of compound interest.
It’s also important to think about inflation and how living costs might change. What seems like enough money for retirement today may not be enough in 20 or 30 years. Check your savings goals often and adjust your contributions as your business grows to stay on track with your retirement plan.
Read more: How to Retire Early
Ways to Grow Your Retirement Fund Over Time
One of the best ways to build a strong retirement fund is to have different sources of income. Depending only on your business income can be risky, especially when the economy is unpredictable. Rental properties, dividend-paying stocks, and other passive income can boost your financial security.
Another good strategy is to automate your savings. Setting up a monthly direct debit ensures you save regularly and avoid missed pension payments, even during busy times.
Cutting unnecessary expenses and saving more can also help your retirement fund grow faster. Look at your business expenses, cut unneeded costs, and get better rates with suppliers to boost your savings.
Seeking professional financial advice can transform the way you grow your retirement savings. Hansford Bell’s experts help self-employed people create retirement plans that match their business goals and personal dreams. With our help, you can find the best ways to save on taxes and make smart investments to secure your future.
Take Control of Your Future with Smart Retirement Planning
Planning for your financial future when you’re self-employed takes effort and regular saving. Even without an employer pension, there are many ways to save for retirement that give you control and flexibility. By knowing your options, setting clear goals, and using smart strategies, you can enjoy a safe and stress-free retirement.
At Hansford Bell, we specialise in helping self-employed individuals like you secure your financial future. With over 20 years of experience, we provide clear, easy-to-understand retirement financial planning advice tailored to your needs. Whether you’re looking for long-term planning, smart money management, or expert one-off advice, we’re here to guide you every step of the way. Take control of your retirement and build a secure future — contact us today to get started.
Read more: Income Drawdown vs Annuities for Retirement
Read more: Financial Tips and Considerations for Retiring Abroad
Disclaimer: this article is for informational purposes only and does not constitute financial advice.
Hansford Bell Financial Planning Ltd is Authorised and Regulated by the Financial Conduct Authority: number 482388.
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