Issue link: https://www.ahpindiestylist.com/i/1316647
52 indie stylist Volume 1 Issue 4 INSURANCE Now let's talk about something equally important, though perhaps not quite as satisfying as investing: insurance. Life Insurance Life insurance is an investment in the financial security of those you leave behind after your death. As you plan your purchase, here are some considerations: 1. Start young—the younger the better. When you are pricing out your options, health and age are a consideration. Just like health insurance, the younger and healthier you are, the cheaper your policy will be. 2. Do you have a partner? If so, can your partner afford your house and lifestyle without your income? If the answer is no, it may be a good idea to find a policy that will close that gap. 3. Business partners should consider the possibility of buying a life insurance policy on each other. Depending on the extent of your partnership, you may not be able to foot the bill if your business partner dies unexpectedly. 4. Are your kids going to college—or are they in college already? This can be a good time to get a term life insurance policy to secure their education. Now that we've discussed the "why" of life insurance, now consider "what" type of life insurance policy you should get. Here again, there are many options, including Whole Life, Term Life, Universal Life, and more. To get the full scoop on insurance, be sure to talk to a life insurance agent. To simplify matters, we will talk about the differences between whole life and term life insurance. RETIREMENT INVESTING Do you have an IRA or 401(k)? If you do, you're already ahead of the game. Way to go, doll! If you don't, here are some tips to help you start planning for retirement beyond Social Security. IRAs and Solo 401(k)s As an independent contractor, you probably don't have a 401(k) because they are administered by employers. But don't despair. There are many options for independent contractors, including traditional IRAs, Roth IRAs, Solo 401(k)s, SEP-IRAs, and Simple IRAs. I would encourage you to speak to a financial advisor to determine which of these are the best choice(s) for you. To simplify, let's focus on traditional and Roth IRAs. Just as Rome was not built in a day, neither is your retirement fund, but both the traditional and Roth IRA will help you on your way to indulging in some martinis at your retirement party. With each of these options, "the most you can contribute to all of your traditional and Roth IRAs is the smaller of $6,000—or $7,000 if you're age 50 or older by the end of the year" 2 in 2020. Although the annual contributions are the same, there is a big difference between the two types of IRAs. The traditional IRA allows you to use the amount you contribute as a tax write-off. On the other hand, while the Roth IRA does not allow you to take a tax deduction now, upon retirement you can withdraw your contributions tax free! Of course, as an independent business owner, this is my choice, but again, you should speak to an advisor about these options. You can have very little and still invest. Don't let the concerns of not having a bulk amount saved get in your way to saving for retirement.