Making IT Profitable:
A Guide for New Businesses & Freelancers

Chapter 7: Planning for Retirement
Part 2: Yes, You Can Save Too Much for Retirement (For Right Now, Anyway)

While Leonard Raskin New browser window icon., a registered financial advisor and principal of wealth management firm , wouldn't disagree that it's better to start saving earlier rather than later for retirement, he does offer a note of caution for technology business owners: be sure to strategize your savings.

Essentially, what Raskin argues is that, in the early years of running a business, there are other uses for money that might be more valuable than having it in a retirement account.

For example: if you start working as a contractor but find out you have way more work than you can handle, you might want to hire a part-time (or even fulltime!) employee to help out. In order to do that, though, you need capital. And if your money is tied up in a retirement account, you'll have to pay serious penalties to access it. That's just not good business.

So let's go one step further: say you've got enough work to justify hiring a fulltime employee and doing so would help you grow your revenue substantially. But because of the penalties associated with withdrawing funds from your retirement account, you're not able to make the hire until six months after you want to, which forces you to lose out on half a year of increased revenue.

Or say your main laptop is zapped in a power storm. Or your smartphone gets dropped in a puddle or stolen. In some situations, it's more valuable to your business to be liquid than it is to have a plan for forty years down the road.

So the bottom line is this: save for retirement, but do it strategically. Don't assume it's the first expense you should take care of when you start working on your own.

“Whether you have money or not, spend it wisely. Don't go out and buy logo pens and all sorts of marketing material. Chances are, the message will change anyway.” —

Next: Chapter 8: Building Relationships That Build Your Business (and Revenue)

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