Planning to Work for Yourself? Don't Forget Your Finances!
As you close in on retirement or enter that magical age, you may also be thinking of opening that small (or large) business you've been dreaming about - statistics tells us that today's retirees are increasingly opting to do some sort of work after leaving their "official" jobs. After figuring out if you can afford to "hang out your own shingle," it's time to tend to the task of using the tools available to help keep your financial future secure as you invest in your business.
The Basics - Insurance and You
Health
Once you realize that health insurance you buy on your own can cost twice as much as a group policy, you can see how getting a good deal here is a high priority. The best deal is if you can be added to a spouse's group policy, but that may not be an option. If you're eligible, there's also Medicare.
If you are about to leave employer-provided health coverage and won't be eligible to continue this coverage - and too young to opt for Medicare - check out "Paying for Your Health After 65" and "Retiring Early With Health Coverage: More Possibilities" for ways to reduce your health costs.
As a self-employed person, you have additional, reative health options to those mentioned in that article. These include having yourself covered as an employee and your spouse covered under a less-expensive individual plan - that simply means buying two separate policies. Or, if your spouse does some work for you, you may both be eligible for a group rate. State laws may also help. For example, in Florida a self-employed person may be eligible to buy health insurance at group rates if the person can prove that he or she has been in business for at least 30 days.
And don't forget to take a tax break on premiums. Many self-employed workers can write off almost half of health insurance premiums. The percentage of this deduction will gradually rise until 2003, when many self-employed workers may be able to deduct all of their health insurance premiums.
Disability
If you plan to earn more than $40,000 annually (experts say it's not worth it otherwise), another insurance possibility is disability coverage. This coverage pays all or a portion of your income if you're unable to work at your stated job for a lengthy period. Considering that about 20% of Americans will become disabled at some point between ages 35 and 65,1 this coverage may be worth it. Even if you can be added to your spouse's employer-provided policy, you may want to purchase additional coverage, as group policies usually cover only about 60% of income.
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