Sometimes entrepreneurs don't prepare for retirement. And for some of them, retirement comes early. While our culture tends to elevate the status of entrepreneur to new heights each generation, the reality is that most of these people fail in the business sense of the word. More than 50% of businesses fail within their first year
of operation. With such a high percentage of business owners being ushered into early retirement (whether or not they happen to start a new venture later on), it's clearly important for people like this to start preparing for a day when they might just be out of work, with or against their will.
Best and worst case scenarios
The most successful entrepreneurs are, of course, the ones who have become household names. These are business people who are on the level of fame of superstars like LeBron James and Michael Jackson. No one should have to point out that, though successful, these people are in the minority. Most other entrepreneurs make several figures less each year than titans of their industry.
In a worst case scenario, an entrepreneur might start a business, then invest all of his or her own personal capital to keep it afloat, only to watch it all sink away within a few mere months. Entrepreneurs aren't unfamiliar sites in bankruptcy
lawyers' offices. And while learning ways to make sure your business doesn't tank is outside of the purview of this article, there are ways for every businessperson to start taking steps to make an eventual retirement much better, financially speaking.
Ways for entrepreneurs to prepare for retirement
These methods are varied, and will apply to a diverse set of situations.
- Save for emergencies. Emergencies can crop up in anybody's life. No matter who you are, you should have an emergency fund in place. But this goes double if you have a business and a family that relies on it for its lifestyle. Emergency funds are easy to put together. Just add as much as you can spare out of your income each month until you have enough money saved to cover your living expenses for six months to a year. This should keep you covered if something goes wrong with your business.
- Invest. Many entrepreneurs are too busy to invest, or so they think. Once they get near retirement, the income they've come to depend upon starts to lessen, and they find they aren't able to maintain the lifestyle they love. You can prevent this from happening by investing, and in more ways than one. Many entrepreneurs like to forex trade for short-term gains, and use ETFs for long-term gains. Other methods like owning real estate can make life after business a whole lot easier and affordable.
There are a lot of ways for entrepreneurs to help insulate their financial lives from the success or failure of their businesses. But it takes a little extra forethought to actually be prepared for retirement when it comes. Everyone would love to be the person who's able to retire in luxury at the age of 34. But for the rest of us, it's time to make a situation that's workable in the real world.