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One option for protecting your retirement: Starting a business

By Owen Linderholm | Small Business

There is a lot of speculation and reporting on the current gloomy state of retirement options for many people approaching retirement age. The bottom line is essentially two fold. People either have not saved enough because the advice they have been given has been inadequate, or they have had their savings eaten away at by excessive fees and poor investment results over time. In many cases, both are true.

Of course, many people have been wiser and luckier than others and do indeed have enough stashed away, or are part of a legacy pension system that is still solvent and able to deliver a comfortable retirement. But for those who are not so lucky, what are the options?

First of all, you can take action to salvage your investments. Make use of analysis and reports to find out what level of fees you are paying and how to minimize them. One such tool is FeeX. It's also worth investigating your investment firm and switching if necessary. Fortunately it is relatively easy to switch older investment accounts. The only one you are stuck with is the one associated with your current employer. All the others can be transferred to whatever investment organization you prefer. If you feel your current employer is putting retirement funds into a poor investment group for you then you can at least try to petition your HR team to make a change in the investment options for employees.

But this is at best a band aid. Especially if you are in your late 40s or older. If you are under that age then you would be wise to really look hard at your retirement needs and at what combination of witholding and investing will most safely deliver that amount to you. But for many people the damage is done. You are not going to be able to completely catch up. So what can you do?

The realities are harsh. You have social security and your investments and if they are not enough the options are to scale back your retirement expectations or find an alternative.

Starting Your Own Business

One alternative that may seem completely out fo the realm of possibility is starting a business, but counter-intuitive as it may seem, there are several ways to start a business at low or no cost. And if you are smart and plan carefully you can make a business out of something you would enjoy doing in your retirement anyway. We are not going to discuss the obvious solution - put off retirement and keep working as long as you can and as long as you haveto. Instead we will look at more palatable options. Here are a few:

  • Start a sideline business
  • Start a lifestyle business
  • Freelancing or consulting

Start a sideline business

Perhaps the simplest option and the most flexible is to start a business on the side. This can be anything that makes sense to you from a simple second job to selling things you make online or at local markets. Ideally it would be something that you can transition to and grow if it takes off and succeeds or when you retire from your main job.

 Start a lifestyle business

What's a lifestyle business? It is a business that you create based around living the life you want to live. Many people make a living consulting or performing services that are things they truly enjoy doing - the kinds of things they might well be doing anyway. Enjoy hosting parties? Then set up a party planning business and do what you like for other people and get paid. Have a specialised skill that people want to learn about? Consider writing and blogging about it and offering your services as a consultant based on the recognition you gain. Like building furniture? Find a niche, like quality handmade period style furniture and sell your furniture locally and even online. Almost anything you like doing that requires skill and knowledge can be turned into a business providing that product or service to others who do NOT like doing it.

Freelancing or consulting

To many people this is the easiest and most obvious option, but the reality is that it can be as hard, if not harder than simply working at the job you had. The difference is that all the benefits accrue to you, not to an employer, so if you are smart and can do a good job, you can at least keep yourself afloat with only part time work. It is also agateway to one of the previous options if you can figure out how to convert the work you know you can be paid for as a freelancer into the work you love to do.

If you are ready to take the plunge and start out on your own as the first step in protecting your financial future and your retirement, let us know in the comments. You can also take advantage of Yahoo Small Business information here and website and ecommerce tools here.

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