|Ideally, you would want to have a couple of years’ worth of living expenses saved before you go solo. But that’s a pretty tall order. Nonetheless, save as much as you possibly can. If you’re leaving a job that provided you with a 401(k), try to avoid cashing out your plan. You’ll face early withdrawal penalties if you are younger than 59-1/2, and income taxes, too. Try other sources of “start-up” income.
Once you do make the jump to self-employment, you’ll want to set up your own retirement plan, such as a SEP IRA or an “Owner-only” 401(k).
Your career as an entrepreneur can be rewarding - and you’ll enjoy it even more if you make the right financial moves.
Consider Benefits Before Changing Jobs
If you are thinking of switching jobs - especially in mid-to-Iate career - you’ll want to pay careful attention to the benefits offered by your new employer. At this stage of your life, you’ve got a lot to consider.
Take a close look at your new employer’s retirement plan. If your new job comes with a 401(k), find out when you’ll be eligible to contribute, if there’s an employer match and if the match also applies to “catchup” contributions you can make after age 50.
You’ll also want to look at your new employer’s other key benefits, including disability insurance and life insurance. Both can be valuable additions to your benefits package.
Before you move to a new job, take a close look at the benefits package - it can playa big role in your comprehensive financial strategy.
Contact Wendell at Edward Jones www.edwardjones.com.