What financial hope does a normal job bring these days? 401k retirement plan vs entrepreneurship, who would have thought that. Today, things aren’t what they used to be.
Many of us have grown up watching the things our parents relied on for financial security, like pensions, traditional retirement plans and group insurance, fade away.
While working a 9-5 job used to be the best way to ensure a happy retirement, that ground has shifted. Today, it’s actually entrepreneurs who stand a better chance at retirement.
Why Entrepreneurship is the New Retirement Plan
Here are the top five reasons:
1. No Glass Ceilings
When someone works a 9-5 job, there are certain caps that keep people in a specific category or space. Figuring out how to increase income or make more money can be tough in these positions.
For example, a sales manager in a wealth management company might only have the potential to make $130,000 annually. Once they’ve hit that cap, it’s likely there are no additional options to pursue, and that the salary will hold for years to come.
While this is great for predictability, it’s not ideal for someone who is trying to build wealth and secure a solid retirement in an uncertain financial market.
Entrepreneurs, on the other hand, have unlimited earning potential and no glass ceilings to contend with. This gives them the option of accessing more opportunities and making smarter decisions. This is probably part of the reason that three out of four American millionaires are entrepreneurs.
2. Higher Hourly Wages
According to Sokanu, the average U.S. entrepreneur makes $171,000 annually. This places them in the top tier of earners and means that they have more financial freedom than many people working traditional jobs.
What’s more, earning potential as an entrepreneur is only limited by two things: how hard you’re willing to work and how creative you’re willing to be.
3. More Freedom
As an entrepreneur, there’s more freedom to pivot, adjust and explore than there is as an employee. This translates to more opportunity and a greater ability to craft your career into something you’re happy with over the long-term. This freedom also means that entrepreneurism creates more jobs for military veterans and other populations.
What’s more, becoming self-employed offers some serious tax incentives that are unheard-of as an employee. A self-employed 1099 form allows you to take numerous deductions, leading to lower tax liability, less money paid to the IRS, and more of your wages staying in your pocket – where you can reinvest them in your business or save them for a rainy day.
4. More Flexibility With Retirement Plans
Some employer-sponsored retirement plans have annual contribution caps and regulating that employees must adhere to. As an entrepreneur, though, these things are no concern of yours.
This allows you to save more for retirement and take creative approaches to securing your future. When your financial options are more diverse, your potential for a happy and financially secure retirement is much higher.
5. A Potential for Exponential Growth
One of the biggest benefits of being an entrepreneur is that there is no barrier to exponential growth. While employees have to slog up the corporate ladder slowly and painstakingly, entrepreneurs are in charge of giving themselves raises, branching out into new territory, and creating and filling new job positions. This is a unique opportunity that only the self-employed enjoy.
Being an Entrepreneur Offers Many Financial Perks
In addition to being able to work where you want and when you want, being an entrepreneur also offers dozens of financial perks that are not to be underestimated. What’s more, entrepreneurs who take advantage of these financial perks in intelligent ways may actually stand a better chance at retirement than their 9-5 colleagues. This is an exciting new truth that represents just one more thing to love about the life of an entrepreneur.
To learn more about the perks of self-employment or putting your feet on the path of entrepreneurship, subscribe to my weekly vlog for veteran entrepreneurs: “Living Money Smart.”
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Matt Sapaula 