THE BLOG
10/07/2014 11:08 am ET Updated Dec 07, 2014

Retirement Savings Strategies for the Self-Employed

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When small-business owners ask me how they should save for retirement, I tell them they don't need to worry about it -- if they like the taste of cat food.

If they don't? In that case, I have some strategies.

Before I launch into specifics, though, I think it's important to emphasize two things about how retirement saving works for owners of small IT businesses (and any small business, really):

The best way to save for retirement is the way that works for you. Any mind game you can play or strategy you can use to trick yourself into wanting to put money away for retirement is great, as long as it works.

Small-business owners have to have double the discipline of employees. Employees have to check the box that says to keep money out of their paycheck each month, but after that they don't have to think about it. For business owners, they have to "check the box" every single time they get paid.

Trick Yourself into Saving More
Love your job? Want to work forever? That's great. But chances are good that, for one reason or another, you'll reach a point where you can't or don't want to work as much as you do now. To maintain a reasonable standard of living when that happens, you've got to have an emergency fund -- or, if the timing is right, retirement funds.

Here are some ways to trick yourself into putting those funds aside:

1. Make it a challenge. If you're the competitive type, set yourself the challenge of putting aside a certain amount of money every month (or a certain percentage of your income). The thrill of achieving your goals now will be a short-term motivator that keeps you saving for the long haul.

2. Treat it like a bill. I don't love "saving," but I'm very good at paying bills. I discovered that if I think of retirement like one more bill, I have no problem putting money aside every month.

3. Plan your retirement and work backwards. If you're the worrying type, sketch out what your dream retirement looks like and figure out what you need to have on hand to make it a reality. Work with a financial advisor to figure out a way to get there from where you are now.

4. Play the percentage game. The Money Book for Freelancers, Part Timers, and the Self Employed is an excellent finance book for anyone with irregular income. It suggests putting a set percentage of every single check into a retirement account, an emergency fund, and account of funds withheld for taxes. Putting that money aside every time helps it become part of your routine -- something you don't even have to think about. (Of course, the book goes into much more detail than that -- I highly recommend getting a copy!)

5. Take baby steps. Can't save 10 percent of your income right now? Save one percent. In six months, see if you can jack that up to two. Check in every six months and bump up your savings until you're putting aside 10 to 15 cents on the dollar.

You Must Have Discipline
When I founded my financial advising business, I had the benefit of a background in the Navy. I also had the benefit of working for other financial management firms for nine years before going independent. I benefited from both the discipline of the military and the education provided by existing wealth management firms.

If you don't have a military background and you haven't spent time working in financial management, learn as much as you can about managing money on your own. Talk with a financial advisor, read books about finances, check out the free resources I recommend on my website. If you aren't saving for retirement right now, it's because you don't honestly believe you need to -- you probably think you can put it off until your business is stronger or bringing in more revenue.

The reality, though, is that we all need to be saving for retirement ASAP. You can only "force" yourself to do this for so long; the better method is to educate yourself about retirement so you see the value in saving and actively want to.

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