NEW YORK (MainStreet) Being your own boss means maintaining independence, developing your own vision of success and profiting from your passion. It can also mean neglecting your individual retirement planning.
TD Ameritrade has fielded a new survey and finds that nearly 70% of entrepreneurs, contractors and other self-employed Americans often are not saving for retirement on a regular basis if at all.
Fully 40% of the self-employed aren't saving regularly, and 28% currently aren't saving at all. That's drastically more than the number of traditionally employed people who do not save regularly (12%) or at all (10%). To boot, nearly a third of young entrepreneurs aren't saving for retirement: 29% of Generation X and 32% of Gen Y.
Launching your own startup is a growing trend. More than 10 million Americans are self-employed, an increase of more than 14% since 2001.
"For entrepreneurs there needs to be a balance between investing in the business today and investing in their future financial well-being," said Lule Demmissie, managing director of retirement at TD Ameritrade. "When you're self-employed the temptation is to think that the business will grow enough that you won't need to save today. But, you don't know when the next payout is coming, and you also don't want to forfeit the power of tax-free compounded growth in vehicles like an IRA. Having a retirement plan in place with regular saving is doubly important."
The biggest challenge in being your own boss is an unpredictable income, according to 61% of survey respondents. But affording good health coverage (33%) and saving for retirement to the extent that they want to (31%) are also common difficulties.