Retirement Planning as a Veteran Entrepreneur

According to a recent survey, approximately 34% of entrepreneurs don’t have a retirement savings plan. Of those, many report not making enough profit to save for retirement, using their previous retirement savings to invest in the business, or they intend to use the profits from the sale of their business to fund their retirement. For veterans and their families, the retirement equation is a little different than their civilian counterparts. In both cases, entrepreneurs need to plan ahead to protect their financial security in their retirement years.

Situation #1: Planning for my Retirement as an Entrepreneur After Retirement from the Military

Congratulations! You have earned your pension after serving in the military. For you, retirement planning as an entrepreneur may not feel so daunting. Between the healthcare benefits and your inflation-protected retirement pay, you have a head start on retirement. Many veterans who retire from enlisted military service do so between the ages of 40 – 50. This leaves about another 15-20 working years to have a second dream career before the average civilian age of retirement – and a second retirement fund.

As an entrepreneur, you may use your military pension to fund a portion of your living expenses – leaving more profit available to grow your business. Alternatively, it offers the option to invest your pension funds and live off your business profits. Or, you may have a dual-income home and can invest your pension into your business to avoid debt.

The options depend greatly on your individual goals and situation. It is a good idea to find a financial advisor with experience working with military families to help you create a scalable plan.

Situation #2: Planning for my Retirement as an Entrepreneur without Military Retirement

If you did not retire from the military, you’re in the same boat as many civilian entrepreneurs. Being self-employed changes your retirement options. While it does offer many freedoms, you do lose certain benefits like an employer-sponsored retirement plan. However, there are a variety of retirement accounts to consider.

Some of the options available to self-employed entrepreneurs include:

• Solo 401(k)
• SEP IRA
• SIMPLE IRA
• “Regular” IRA (including Roth version)
• Profit Sharing Plan

Regardless of what you choose, start saving early. Even if you can only save a little – it is better to add minimum contributions and then build on that as your business grows. You can also supplement your retirement accounts with investments and other strategies. It is a good plan to find a financial advisor with experience working with self-employed individuals and business owners.

Regardless of your situation, familiarize yourself with the resources available to you through the Small Business Administration and VA, as well as other programs designed to help you on the road to success in small business.