Retirement Planning for Contractors: 12 Things to Start Doing Today

Are you a hardworking contractor in Tennessee? You've built your career on skill, determination, and a solid work ethic. 

While you probably enjoy your work, you may still have moments when you dream about your retirement. But, have you started planning for it? 

Retirement planning might not be the first thing on your mind when you're busy with projects, but it's crucial to secure your future. Here are 12 things to start doing (or stop doing) today. 

12 Ways to start planning for retirement today

1. Don't rely soley on social security

Social Security is a valuable resource, but it shouldn't be your sole retirement plan. You’ll most likely need other sources of income to enjoy the retirement you dream of having. 

2. Start early—really early

The younger a person is when they start contributing to their retirement, the more their money will grow. Even if you can only sock away a small percentage of your income, start putting money away today.

3. set clear goals

What do your retirement plans look like? Traveling the world? Spending time with grandkids? Enjoying your hobbies? Will you keep a part-time job or fully retire? Knowing what you want to do helps determine how much you need to save.

4. Build an emergency fund first

An emergency fund protects your finances and helps avoid going into credit card debt or needing to tap into your retirement savings. Make sure you have an emergency fund to cover unexpected expenses. 

Related: 9 Reasons You Should Choose A CPA Firm That Specializes In Your Industry

5. Explore retirement accounts

Research retirement account options like a 401(k) or a Simplified Employee Pension (SEP) IRA. These accounts offer tax advantages and can help your nest egg grow quicker. 

6. Invest wisely

Take advantage of interest instead of just stashing your money under the mattress. Invest wisely in stocks, bonds, or mutual funds. Put your money in lots of different investments (called diversification) to spread the risk.

7. Stay On Top of Tax Breaks

Tennessee offers some tax incentives for retirees. Talk to your CPA about these and take advantage of any available deductions to maximize your savings.

8. Keep Your Debt Load low

High-interest debts can eat into your retirement savings. Make it a point to pay off debts like credit cards and loans. Once these are gone, you’ll have more money to earmark for retirement. 

Related: 10 Tax-Saving Tips For Electricians And Electrical Contractors In Tennessee

9. Consult a financial advisor

Retirement planning has so many options the prospect can seem overwhelming. If you're unsure about where to begin, meet with an experienced financial advisor. They can help you create a personalized retirement plan tailored to your needs and goals.

10. Stay informed

Nobody is going to care as much about your retirement dreams as you. Watch your investments and educate yourself on financial options. Attend seminars, read books, and follow trusted financial websites to stay informed.

11. Reevaluate regularly

Your retirement plan isn’t a set-it-and-forget-it course.

Reevaluate your goals and financial situation when:

• You add to your family
• Your business grows/you make more money
• You change your retirement plans (decide to move out of state, retire earlier, etc.)

Consistently revisiting your plans to make sure they relate to your life stage will make certain you stay on the right track.

12. Consider Long-Term Care

Many people see their retirement funds sucked away by an unexpected illness. As you age, healthcare expenses can become a significant burden. Look at long-term care insurance options to help cover medical costs. It can end up protecting your retirement savings down the road.

In the beginning, retirement planning may seem overwhelming. However, it’s about taking small, consistent steps every day, every month, every year to secure your future. As contractors, you're used to planning for projects, so think of your retirement as the ultimate long-term project. By following these 12 steps, you'll be well on your way to a secure and enjoyable retirement.

Chaliff + Associates: A Tennessee CPA firm Contractors need in their corners

As our list shows, working with the right professionals (financial planners, attorneys, CPAs) is integral to creating and following a successful retirement plan. Trust Chaliff + Associates as your partner in all your business needs, including helping you prepare for retirement. We’ve provided payroll, bookkeeping, tax assistance, and forecasting and planning for dozens of Tennessee contractors. 

Let us handle your books so you can focus your energy on building your contractor business. Reach out today for a complimentary consultation with one of our professional CPAs.