Connect with us

Accounting & Finance

7 Reasons Why Working After Retirement Can Pay Off

people meeting

Whether retirement is on the distant horizon or just around the corner, chances are you’re concerned about how you’ll spend it.

With life expectancies rising all the time and over a quarter of current 65-year-olds in the US expected to live past the age of 90, retirement is a much larger chunk of your life than you might have expected.

The decision to continue working beyond retirement is being taken by more and more Americans for a number of reasons. These aren’t just financial concerns – they’re also related to emotional well-being and our sense of purpose.

Working after retirement can pay off in so many ways, so here are the seven most important ones.

1. Working After Retirement: The Money Question

The main motivation for going back to work after retirement is, unsurprisingly, financial. With an unbelievable 78% of Americans not saving enough for retirement, the workforce is only set to get greyer.

If you retire at 65 and live beyond 90, you’re essentially expected to live off of your savings for two or three decades. This is only sustainable if you have six figures saved away for retirement.

Most people don’t have this saved up, which is why even a small part-time job can be essential for maintaining a good standard of living in old age. Social security benefits are stretched thin enough as it is, so the need to be self-sufficient in old age is more important than ever before.

On average, senior citizens have much lower living expenses, so you won’t need to be clocking in 50 hours a week to stay afloat.

2. The Need for Health Insurance

One of the key concerns of those working in retirement is health insurance. Old age comes with plenty of annoying ailments we’d rather do without. This is why many prefer to work to keep access to comprehensive coverage like that provided by Medicare Advantage plans.

Coverage for elders doesn’t start until you reach the social security age of 65. If you retire before this age, you’ll want to consider working to retain access to coverage.

Even beyond this point, you’ll want an insurance plan which covers extra costs associated with old age. Working in retirement will allow you to make sure your prescription drug costs are all covered, and you’ll have one less thing to worry about.

3. Increase Your Social Security Benefits

Your social security benefits are your safety net. They’re your lifeline that will sustain you long after you’ve stopped working. In order to get the maximum benefits from your social security, you should delay them for as long as possible.

For every single year after you reach the eligible age that you delay your social security payments, your benefits will grow by an average of 8%. This means that if you were to continue work after retiring until the age of 70, your social security benefits would be a whopping 25% larger.

This means that if you’re healthy and able to work, you should do so for as long as possible. You’ll be grateful that you did so a few years down the line.

4. Find a Sense of Purpose

There are plenty of personal, emotional benefits to working after retirement too. Many retirees complain that suddenly stopping work robbed them of a much-needed sense of purpose.

Like it or not, our jobs form a huge part of who we are. If you’re fortunate enough to be doing a job that you love, then doing so for longer will keep you focused and happy. You should never underestimate the effect that boredom can have on our well-being.

Having something that gets you out of bed in the morning has been proven to help you live longer and to enjoy your golden years even more.

5. Keep Social

Our jobs form a huge part of our social network. Suddenly retiring can lead to an unexpected dip in your social life. It’s no secret that old age can bring loneliness, which is one of the leading causes of depression among older people.

Maintaining an active social life is crucial to our happiness. Working in retirement will allow you to keep your friends around you and ensure your days are filled with social interactions. Retirement is a dramatic life adjustment for most people, with one of the biggest adjustments being social.

If you don’t have a partner, then the benefits of working in retirement are even more prominent. Consider staying in a line of work that allows plenty of contact hours, both with co-workers and with the general public.

6. Boost Your Legacy

This is another financial benefit of going back to work after retirement. With old age approaching, a major concern will be the legacy that you leave for your loved ones.

If you dream of bequeathing a college fund or a safety net for your family members, then consider working a few extra years to achieve that. Working and saving through your older years will boost your inheritance, thereby boosting the opportunities you leave behind for your nearest and dearest.

Even saving just a few hundred dollars a month will greatly increase the amount you end up leaving for your family. Those closest to you are too important to neglect.

7. Embark on a New Adventure

While there are lots of practical benefits to working after retirement, at the end of the day it’s all about the journey. Life is short, and your retirement years shouldn’t be discounted as pointless.

Going into work after you retire is a great chance to embark on a totally new adventure. You could make new friends. You could decide to switch fields and learn new skills. You could find a job which allows you to experience totally new things that you haven’t done before.

The right job can be a lot of fun, so choose wisely and you might find that working after retirement is the best decision you ever made.

Learn More

To learn more about working after retirement or the many other financial steps you should take as you approach your golden years, make sure to follow our accounting and finance section for all of the crucial tips you’ll need.

Accounting & Finance

5 Hidden Costs Of Starting And Running A Business

tips to reduce business costs

Starting and running a business isn’t cheap. As the old adage goes, it takes money to make money, and that has never been truer than when it comes to starting a venture. So when creating your budget plan, it is important that you include all the costs that go into running a business.

Knowing what expenses go into running a business can help you not only start the business but ensure you remain in business. Here are five business expenses you need to take into consideration.

1. Employee Benefits and Perks

In addition to wages, there are several employee costs that you must take into account when running your business. Payroll taxes, benefits, and retirement plans are some expenses that, when not accounted for, could cause your business to run you into the red. It’s also important to add smaller expenses such as paid time off, training, conferences, employee turnover costs and office perks as they can add up very quickly.

2. Insurance

When you start your business, you might not need a lot of insurance. At the bare minimum, you’ll need liability insurance to protect yourself from liability risks imposed by lawsuits or similar claims. As time goes by, you’ll need more insurance policies to protect your business. This includes worker’s compensation insurance, errors and omissions insurance, property insurance, and business interruption insurance.

The type of policy and amount of insurance coverage you need will depend on several factors, including the type of business, size of business, number of employees, risk factors and revenue. These hidden costs can make it hard to stay on track if you don’t include them in your business plan.

3. Taxes

Taxes can be an unpleasant surprise for new business owners, especially if they aren’t generating money. Even if you aren’t making much, paying taxes can hurt your business in the first few years. One type of tax you need to pay is the self-employment tax which is more than 8% of your adjusted gross income. You’ll also pay additional taxes every year to incorporate your business, no matter if you have revenue or not.

There are lots of resources on the internet that can help you estimate the total amount of taxes you’ll need to fulfill your initial expenses. A business startup cost calculator can provide a rough estimate of all the taxes fees you are required to pay when starting and running your business. It can also estimate the total amount of capital you’ll need during your first year in business.

4. Legal Fees

Legal fees are the number one hidden cost for small businesses. This is because small companies are victims of frivolous lawsuits as they are more likely than large organizations to settle rather than litigate. In 2008 alone, the tort liability price tag for small businesses was a staggering $105.4 billion dollars. Settling cases for small businesses costs less than $5,000, but even as low as $1,000 can be significant for a small business.

5. Administrative Costs

These costs will sneak up on you if you don’t include them in your business budget plan. The costs include all basic office equipment like desk, chairs, computers, filing cabinets, printers, utilities, software and office cleaning equipment to name a few.

Planning your business budget is one of the most stressful but important parts of entrepreneurship. Including these five hidden costs in the budget can go a long way toward getting your business up and running.

Continue Reading

Accounting & Finance

7 Ways to Cut Costs in a Small Business

money in jar

Cutting costs in a small business doesn’t have to be complicated or time consuming; the trick is knowing where to look. What may appear small costs on a daily or even monthly basis will add up over time to a significant amount. If you can put yourself in a budgeting mindset, you will be able to identify the must-haves from the nice-to-haves and the essentials from the luxuries.

Of course, cutting costs is not always about not spending money; it can also be about learning to spend your money in smarter ways. Here are 7 ways you can cut business costs and, ultimately, increase profits.

1. Embrace Technology

Technology and business software have moved on considerably in recent years enabling us to streamline efficiency and modernize our operation on a whole new level. Online payment services, accountancy software, online conferencing services, social media platforms…there are a huge number of ways to make your business more efficient and easier to manage.

2. Go Paperless

If you’re still printing and posting your communications and marketing materials, you should try and move as much as possible online. You can send communications and invoices via email and can keep your company’s key data in a more secure virtual Cloud storage system rather than a filing cabinet. You’ll save on the cost of paper, ink, envelopes, and postage, and also make your operation more environmentally friendly through reduced waste.

3. Try (Or Do More) Online Marketing

For most businesses, online marketing is no longer an option; it’s a necessity. From a website optimized for search engines to informative blogs and engaging and entertaining social media marketing, online advertising can yield great results in terms of brand awareness and sales with minimal costs.

4. Stick to a Budget

You can’t make business decisions without a budget; you need to know exactly what is coming into your business account every day and what is coming in, so it’s important to get the right system which enables you to do this. Stick to a strict, cost-reducing budget as much as you can, and you should reap the benefits very soon.

5. Switch Utility Suppliers

A quick and easy way to save money is to switch your business utilities, supplier. There are lots of suppliers out there and changing to a cheaper tariff could save you a significant amount of money each month. It may also be worth considering swapping a traditional phone line for mobile phone contracts or virtual phone systems which use an internet connection rather than a landline.

6. Consider Cheaper Premises

If you can be flexible about where you run your business from, you should consider whether you could be saving money by making a change. You may be able to downsize to smaller premises, sharing office space or even working from home. If you have employees, they may be able to telecommute.

7. Buy Second-hand or Refurbished Equipment

You may be able to reduce business costs by opting for refurbished furniture and equipment rather than brand new items. Many brands offer a good range of their products at discounted prices.

Continue Reading

Accounting & Finance

Making Something Out of Nothing: Business Grants Can Make Your Business Grow

business funding

Money. Most people need some, others need a lot. For the very few, they can never have too much money. And for these people, business is the way to their pursuit of happiness and success.

But as you all may already know, much like the pursuit of any dream, the road to success is paved with rough terrain and unexpected detours. But all that comes later on in your journey. The old adage remains true here — taking the first step is the very first step.

In business, that first step often translates to whether or not you’re able to generate funds for the business i.e. capital. And that, my friends, is often when many would-be entrepreneurs become disheartened. Because, whether you want it or not, setting up a business is going to require a significant amount of money, something that not everybody has access to.

Unless, of course, you’re able to secure money from a different source.

Raising Capital

There are many ways to raise money, but crowd sourcing and business grants seem to be the most popular method as of late. And it’s only rightly so. But between the two, business grants are more secure and they are also more predictable.

With crowdsourced funds, you’re banking a lot on how well people are going to react to your proposal. You’re going to have to convince a lot of people to get the money you need. With business grants, you only need to convince the grantor that your idea has merit — this is not as easy a task as it seems!

What Is a Business Grant?

According to the Balance.com article, “small business grants are small amounts of seed money that further the goals of federal, state, or non-profit organizations.” The main difference between a business grant and a loan is that those who are given small business grants are not required to repay the amount of the business grant.

However, while this may seem like free money to the uninitiated, the difficulty lies in being able to convince grantors to entrust money to you.

This is because grantors are more careful in awarding their grants. For reference, the Federal Government does not award grants to help businesses start or expand. The only businesses that are awarded Government grants are those that yield the most success and in certain industries like medical research, science or environment.

Furthermore, there are many types of grants for specific business types.

Exactly How Important Is A Business Grant?

For a lot of businesses, a grant can mean the difference between success and failure. You may have the most brilliant idea but if you don’t have the resources to make that idea come into fruition it won’t mean much. This rings true even when you’re sure that you’re going to have a very profitable business venture.

A prime example of a business that could quite possibly benefit from a small business grant is Alte, a company that seeks to retrofit existing public transportation fleets with hybrid drivetrains which are more efficient as you put more miles on your vehicle.

Approximately 62 billion dollars is spent on new vehicles every year. Alte’s hybrid power trains could provide a better alternative to fleet owners as these hybrid drive trains would preserve the longevity of their vehicles.

Not only would fleet owners be able to get more use out of their vehicles, but the company would also be earning about 2 billion dollars of revenue every year. The only problem is that the company needs 130 million dollars to start production, a venture capital amount that could be easily solved by a business grant.

So, as you can already tell, business grants have the power to alter the fortunes of a startup. There are many ways to secure a business grant and sometimes you can even get one through a contest, such as this Fedex small business grant contest.

Continue Reading

Accounting & Finance

Brexit, Business & The Markets

brexit

No matter how you try and look at it, the word ‘uncertainty’ will always come to mind when discussing Brexit. Everyone is uncertain of how things will pan out when Brexit actually happens, and the UK leaves the EU. How will this affect exchange rates? What will it mean for small businesses?

There are more questions than answers as we can only really speculate based on predictions and things that have already happened. As such, we’ve tried to create a summary of everything that you need to know about Brexit, business, and the money markets.

The Current Brexit Timeline

Before we begin, it’s a good idea to see where we are in the Brexit timeline.  Research from DailyFX – In June 2016 the UK public voted to leave the EU. This was followed by the triggering of Article 50 in March 2017 to show the EU that the UK will leave in 2 years. Fast forward to March 2019, and we’re currently in the midst of a deal being drawn up that parliament will vote for or against. If they agree, we leave the EU and go into a transition period that takes the UK up to December 2020 when the government and EU agree on the future relationship. If no deal is approved, then the UK just leaves the EU without a deal.

Why is all of this important? Because it’s having a crazy effect on the money markets – particularly the exchange rates. Not only that, but business owners have no clue what this will mean for them.

Uncertainty From The Beginning

We can only speculate about how businesses will function after Brexit, but there’s no denying that confidence is at an all-time low. Everyone is predicting a period of financial uncertainty because some big companies may cease investment in UK goods, which is bad for all businesses in the UK. Then, there are the EU Trade Regulations that could start charging the UK when trading with countries from the EU. As such, it becomes more expensive to purchase raw materials for small businesses, which could put a lot of people in a dangerous situation.

Everyone was uncertain from the moment Brexit was announced, and things appear to be even worse right now.

Problems In The Money Markets

If you look at the currency exchange markets, there are recent indications of problems for GBP. Specifically, the GBP/JPY pairing is trading in the red in Asia. Experts say this is thanks to the current negotiations about the Brexit deal. Nobody really has a clue what’s going to happen, which creates further uncertainty in the money markets. There’s been a lack of progress, which is why GBP is falling in value.

So, the easiest way to summarise things is that Brexit is currently hurting the markets. A lack of control over the situation from the UK government leads to growing fears from markets all over the world. This creates a lack of faith, hence the decline of GBP. As for business confidence, things aren’t much better. We can’t say for sure what will happen when the UK leaves the EU, but we can say that nobody is very optimistic.

Continue Reading

Accounting & Finance

How to Set Up a Payroll: A Simple Guide for Startups

payroll

When you start a new business, there will always be a great deal to think about. But there is one thing you cannot overlook.

That is payroll.

If you can’t get a grip on your payroll process, you could lose the talent you worked hard to acquire. Your employees work for you in exchange for compensation for their time and talents.

When you start out, you’re not going to be a payroll expert unless you’ve worked intimately with a payroll in the past.

Do you need to learn how to set up a payroll? Continue reading to find out more about how to do so.

Tips for How to Set Up a Payroll

Setting up payroll may not be as easy as it sounds. Many new entrepreneurs find themselves with a fundamental misunderstanding of the payroll process. The steps you need to take are as follows:

Employee Information and W-4s

In order to complete the necessary tax information, you need to have your employees’ information. This includes each employee’s social security number (SSN) or tax identification number (TIN).

Each employee should fill out a W-4. This will determine how much money you should withhold from each paycheck. You will withhold less money for those workers who have more allowances or dependents.

Employer Identification Number (EIN)

Every employer must have an EIN. You may need to apply for one with the IRS. This will serve as a sort of SSN for your business.

Know Your Dates

There are a few dates you need to keep in mind. You need to know when you pay your employees, when you pay your taxes, and when you file.

Mark your calendar and never forget these important dates.

Calculate and Withhold Taxes

Make sure to keep track of how much in taxes you should withhold from your employees’ paychecks.

You can use an IRS withholding calculator to determine how much federal and state tax you should withhold.

You may need to submit monthly tax deposits on the federal, state, and local levels.

Prepare and File All Tax Forms

You can never forget to file your tax returns each quarter and prepare your employees’ W-2s at the end of each year.

Issuing Paychecks

Some startups may choose to issue paper checks, even though the direct deposit is readily available. This is because paper checks may be cheaper for the time being.

Each paycheck should come with a paystub, which outlines employee wages, time, and withholdings. You may find a paystub generator to be a useful tool for this process.

Payroll Processing Doesn’t Need to Be Hard

At first, you may think payroll is an intimidating and overwhelming process. You’ll find there’s more to it than you originally thought.

There is more to learn about handling your business finances. From how to set up a payroll to managing your cash flow, you must know it all!

It’s time to sit down and do some necessary homework. To learn more about managing your finances, visit our section on accounting and finance.

Continue Reading

Accounting & Finance

5 Things That Increase Your Risk of Getting Audited by the IRS

calculator

Running a business can be stressful enough, and the last thing that you want is to be audited by the IRS. Even when a business has nothing to hide, it can be intimidating to handle an IRS audit.

More often than not, the idea of getting audited is more serious than the event itself. Most audits are done through the mail and, as long as you are honest, may work out in your favor. Keep in mind that it is important to seek professional help if you are struggling with your taxes.

That being said, below are five things that may put you on the IRS’s radar.

Making More Money

According to IRS statistics from 2016, if you show a significant increase in income from one year to the next, your chances of getting audited can increase from 0.65% to anywhere from 1.7% to 5.9% depending on your reported income. In addition to the increase in potential auditing by moving into a new tax bracket, sudden increases in income – especially for self-employed individuals – will be red flagged by the IRS, even when they are legitimate.

Filing Income Tax When It’s Unnecessary

If you file an income tax when you had no taxable income for the year, especially if you previously had, you are at higher risk of getting audited. While you are required to file a return regardless of how much income you made, the absence of income will raise eyebrows in the IRS.

Not Reporting All Taxable Income

All taxable income is required to be reported to the IRS, especially if it is traceable. The IRS recieves copies of all tax forms that you receive. Anything paid to you by other entities such as salary payments (W-2s or 1099s), dividend income, and interest paid is tracked by the IRS. Tax professionals can review your files before you submit them to ensure that you are not missing any pertinent information.

Improper Use of Reported Income

If you report income that was used for purposes other than stated, you increase your chances of getting contacted by the IRS. This typically happens when people invest money into an idea.

Tax Evasion

By not paying or purposely underpaying taxes, you are at perhaps the highest risk of getting audited. There are many clues the IRS will look for to find individuals who are participating in tax evasion. Some of the red flags include claiming 100% use of assets (such as a vehicle) for business, deducting business travel and meals, taking higher-than-average deductions compared to other businesses in your field, or anything else that could be seen as stretching the truth. This is especially true with individuals who are self-employed.

For some individuals, there is nothing more terrifying than getting contacted by the IRS. In reality, these routine audits should be nothing more than a formality that you have to engage in as a working professional. Audits are nothing to be concerned about for an honest taxpayer.

Continue Reading

Trending