This article was written exclusively for EntreLeverage by guest writer Jenny Holt.

There are only 62% of business owners who can confidently say that they saved enough to live comfortably after retirement, yet around 25% claimed that they have not saved anything from their earnings. Since most entrepreneurs are normally busy balancing all their priorities every day, planning for their retirement may rank at the bottom of their to-do list. So how can you be assured that you can still take care of yourself after you retire? Here are some tips that you must consider when thinking about your pension plans.

File for Solo 401k Plan

 If you are working on your own, you can be eligible to file for a Solo 401k Plan, also known as the One-Participant 401(k) Plan. This is the ideal retirement plan for self-employed individuals or small business owners with no employees except for the spouse. Having a Solo 401(k) will allow you to have the same tax benefits of the traditional 401k of regular employees. As a business owner, you can make elective deferrals up to a maximum of up to 100% of your earned income or compensation up to the annual contribution limit. You can also opt to contribute by paying your non-elective contributions up to 25% of your earned income.

SEP Plans Also Help

If your business hired a few employees, you can also prepare a pension plan for them and yourself by filing for Simplified Employee Pension (SEP) plans. Unlike the traditional 401k plans, you do not need to pay for start-up and operating costs. It also has a flexible annual contribution scheme which could be beneficial if you have an unstable cash flow.

Put 10% of Your Earnings Directly in the Bank

No matter how much you earn for the month, you must always take 10% of your total earnings and put it in your savings account. It would be better if you open a specific account for your retirement funds alone. You also have the option to put a portion of your savings on low-risk investments with high returns so you can expect to get some money once you made the decision to stop working in the future.

Planning for your retirement may be at the bottom of your to-do list at the moment. But if you want to live comfortably when you decide to stop working, you need to start your pension planning as early as today. As much as possible, never let your current workload become an excuse to delay your long-term pension planning since this will have a major effect on your future.

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