You can only do so much to increase your retirement security. Once you have set up a plan to save each month, selected an appropriate investment allocation, and set up an emergency fund, the only way to improve your chances of a comfortable retirement is to create more income.
Of course, there are many ways to make more money. One of the best ways to retire comfortably is to start a side business that leverages your expertise. Here are eight more reasons why starting a side business by the time you retire will increase your retirement security.
No age discrimination. You won't get fired because you are overqualified and the company thinks you are overpaid. When your business thrives, it's because of what you can provide, not how you look or how old you are.
You can start anytime. You can do it now, next year, or in a few years. Of course, the earlier you start, the more time you have to grow your business. But there are no time constraints or limits.
The hours are flexible. Once you start, you can work in the daytime, at night, on weekends, or on weekdays. And since there's no one else who is telling you that something has to be done, you can determine how much time you want to put into this venture.
Keep your mind sharp. Playing golf every day is great, but it doesn't exactly keep you mentally healthy. Running your own business could serve as a good way to spend your time post-retirement as long as you set up your business so it's not terribly stressful.
Extra income will help in retirement. If you decide to only work 2 hours a day, you may not make much money. But even a little bit of extra income could help to finance retirement necessities and maybe even a few luxuries.
Delay your Social Security payments. The income from your business might allow you to delay claiming your Social Security checks until you are 70. Then you will get more in each check when you do receive the money in the mail.
Grow your Social Security earnings record. Your Social Security payout is based on your 35 highest years of earnings. If you were only employed for 34 years, then $0 will be factored in for the 35th year. This drastically lowers your average. However, a side business in retirement can help with that. The income from your business could potentially boost your Social Security checks.
Deduct your health insurance. One of the benefits of being self-employed is being able to deduct your health insurance on your tax return. When you are employed, this isn't such a big deal. But when you are retired, you are essentially getting a discount on your health plan just because you run a business.
Any business is hard work. I'm not trying to suggest that anyone can just create an amazingly successful business venture out of thin air. But if you put in the work and consistently try to improve, you could set up an extra stream of income. Remember to adjust your retirement savings plan to reflect the new influx of money.
David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.