Are you an entrepreneur, independent contractor, consultant, or temporary worker? According to Intuit, 40% of Americans will fall into one of these categories by 2020. What do they have in common? According to TD Ameritrade 28% of the self-employed are not saving anything at all for retirement and 40% are saving when it is convenient. This has catastrophic consequences for 68% of a large group of people.
There is an old saying: “Consulting is a great business if your goal is to break-even”. Or, said differently, after you back out business, health care, and personal expenses, there is nothing left over for savings, much less accumulating significant assets for retirement. It is not surprising that 68% of the self-employed have a major problem with retirement planning.
So what can they do about it? One obvious answer is to question the whole concept of retirement. Who says people have to retire by a certain age if they are mentally and physically capable of being productive. The self-employed have to have a different mind-set than people who work for large employers with mandatory retirement ages.
At a minimum, the self-employed should be thinking about retirement when they receive maximum social security benefits at age 70. Let’s call this deferred retirement as opposed to non-retirement. This defers the retirement income problem to a later date, but it does not solve the problem. Social security covers less than half of most Americans’ retirement living expenses.
What is the long-term solution if you are in reasonably good shape and still motivated to be productive? You need to figure out a way to package your knowledge and skills into a micro-business and market them over the Internet. You may still be self-employed or you may choose to affiliate with a firm that creates work for you. I suspect there will be a lot of these firms in the future. They will not let all of that knowledge and experience go to waste.
Why work over the Internet? Who needs an office anymore? You can work from home in your pajamas. You commute by walking down the hall. There is no office attire expense. And, more importantly, you may have a flexible schedule that allows you to work mornings, afternoons, evenings, or weekends so you can squeeze in a round of golf or two with your friends each week.
Another major plus for working from home over the Internet is you can work from anywhere that has Internet access. You could be enjoying a great vacation while earning money working a few hours per day.
The bottom-line is you can develop a micro-business that supports your desired lifestyle. And, it should be sustainable well into your 70’s. If you play your cards right you may even be able to build an income stream that someone will buy from you. The buyers are the kids who are still in their 60’s.