How are you planning your retirement as a wedding photographer?

<p>Hi,<br>

I'm in my twenties with a new wedding business. I am currently employeed full time as a freelancer and know I will be laid off this Spring. I am not worried about making a living with my bussiness. I feel confident that I can make a great living in fact...<br>

However I am worried about saving for the future, specifically retirement. Everything is in essence prepared for you when you enter a corporate job, the first mandatory sit down with HR and they hand you all the paper work needed to make sure you have a savings and retirement plan-which is nice and super easy. <br>

How are you fellow photographers saving for retirement?<br>

And a questions for fellow NJ photographers. I am looking for an accountant, anyone you could recommend?<br>

Thanks in advance for your input!</p>

<p>As someone at the other end of the scale (i.e. retirement just coming up) I am very much in two minds over the whole 'planning for retirement' issue.<br>

On the one hand, yes it seems sensible if you're self employed to plan and save as others would have you believe, and as I have done. On the other hand you have 40 years plus before your actual retirement. Your situation, your government, and world economics could and probably will be vastly different by that time, so you're kind of second-guessing what's needed.<br>

For myself, all the advance preparations with private pension schemes have suddenly in the last few years become worth only a fraction of what I expected due to world economics. So I am tempted to look back and ask myself was it really worth putting so much aside, or should I have bought a few more Nikons instead !</p>

<p>Being a part time wedding photograph3er and full time employed elsewhere, I have a differnt view.<br>

Once I retire, I will probably go after more dates to offset what SS isn;t going to have for us.<br>

Right now I only book 2 weddings a month as I do like to have osme free time. I"ll probably look at 3 per month in a few years. </p>

<p>First, congratulations on tackling this early, it can make a huge difference in what you need to save:</p>

<p>http://www.calcxml.com/do/sav05</p>

<p>Essentially, the sooner you start the save, the less money you will need to save to reach your goals. As what what "umbrella" to use, you have a few choices but for a single person (IE not a small business), I might say that a traditional IRA would be your best bet. The principle drawback to an IRA is that you can only put aside so much each year. For 2010 the maximum combined total for an IRA AND a Roth IRA (if you did both) would be $5000. If you need to save more than that, there are other options but best to seek professional advice. Other than than, grab some books on the subject of investing. The stock market is about the only place that will beat inflation giving your savings more buying power in the future instead of less. With a bit of due diligence on your part, you can be doing well. As a matter of fact, about the only benefit to a company sponsored plan is if the company matches any funds. I shudder when I get the prospectus! This is a large, well known financial company and only two of their mutual funds beat the index they are up against. And they are PAID to underperform! If it wasn't for a company match of funds (there is a 100% return), we would be better off simply throwing the money into the index fund itself, gaining a higher return and cutting out the management fees! But I digress....</p>

<p>Wow, John! Great info... and somewhat daunting too. Yeap, trying to seek prof. help. Im not good with numbers.</p>

<p>Whenever you are working at a place that gives you a 401k option, particularly matching, do what you can to max it out each year. When you are self employed, the 401k isn't an option, the IRA is. When I left my full time job to do photography full time I had to roll my 401k into an IRA or face penalties where they would take taxes out on it. Look at your budget over all in life, and see where you can cut things that aren't as important. Take that money and then put 2/3 into your IRA and 1/3 into a slush fund. Things come up, cars break, roofs need to be replaced, etc etc. Then with your IRA, because you are young, don't just put it into a savings account. Put at least 1/2 in more volatile things and 1/2 in more fixed income stuff like bonds. As you get older shift it more to fixed income and less on volatile things. This is the standard to do to maximize your growth potential while maintaining a fairly safe risk profile. Try to put away at least $50 a month. It doesn't sound like much, but eventually it adds up. Remember that if you have it set up to monthly automatically deduct a large sum, and then you hit a hard month and don't have much savings, you are going to likely have to really rely on your credit cards and the interest they charge can be TERRIBLE. See if you can set up an online checking account with a fairly high interest yield, I'm a fan of eTrade, Capital One, and ING. That way you are making interest on the deposits as they come in.</p>

<p>Remember that putting money into an IRA is different than just putting it into a savings account. It is tax free, but you incur penalties if you take it out before you hit your retirement age (whatever it is for us by the time that rolls around years from now!). So don't over save into your IRA. At the end of the year, if you haven't had to take much out of that slush fund, put some of it into the IRA too. <br>

Also, if you get one of those accounts from eTrade, etc, they usually have financial planners that are free for you to use. An accountant may be able to direct you in the right direction, but these financial planners really have their fingers on all the specifics for retirement.<br>

Hope that helps!</p>

<p>Be careful of how many *eggs* you put into a IRA. Once the IRA funds are spent, <strong>the entire income tax bill may be due </strong>> nice for the IRS, not-so-nice for the person saving, saving, saving for the future. Remember, the IRS has "forgiven" income tax on the amount you put into your IRA over the years.</p>

<p>A more balanced method might be one way to go. If you have a local electric utility, perhaps buy ten shares and let the dividends re-invest for those 40 years. [Most electric companies have a pay-as-you go policy for customers: no pay the power bill, no more power to your billing address.] And, sometimes, a stock will split and you end up with more shares that -in time- may increase in value. Just pick quality stocks...</p>

<p>Being an economist by training (and I went aaaaaall the way to a PhD and then some) and a business consultant for large banks for the past 10 years AND getting ready to drop all that for full time photography (a move which is loooooong overdue), I will tell you this: there is NO plan in the world, however stable it may appear right now, however sold the company offering it may appear (even historically) which will stand the 40-year test of time! NONE.</p>

<p>In 40 years retirement age will be, most likely 10-15 years MORE than it is right now (that's inevitable since most current retirement and insurance models are built on the assumption that most of us live to the ripe old age of 72-76, which the actual number, right now is closer to 80-84 and expected to increase by 5-8 more years in the next 20, let alone 40!) In 40 years, currency values will have changed by MORE than any promised, anticipated, guaranteed return, not because the US economy is over or under-performing, but because there is no such thing as a local economy any more, ESPECIALLY in the case of such long term investment funds.</p>

<p>So, I would suggest finding some sort of long-ish term investment (say 5 years or 10), and start putting money there. When that matures, THEN decide what you'll do. Hell, maybe in 10 years photography will have been totally replaced with 3D virtual reality or something and you will no longer find any joy in it and decide to quit!</p>

<p>You've got time...take it...!</p>

 

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<p>And, sometimes, a stock will split and you end up with more shares that -in time- may increase in value. Just pick quality stocks...</p>

 

</blockquote>

<p>It is a common misconception that stock splits are good for you. In reality, stock splits <em>devalue</em> your ownership in the company. Now hopefully the equity raised via the spilt is put to good use and the company does indeed grow as does the stock price and you gain in that way. </p>

 

 

<p>I invest firstly in my own endeavors. No one, especially the (virtually thieves) banks, will work as hard with your money as you will. </p>

<p>Once you have cash, you can do many things. Money that is tied into retirements, et al, will only do what the markets do.... period.</p>

<p>I have found the most reliable and for that matter, profitable investments are those in my own path. You can sit on money that is already there and as it grows, feel less worried (assuming you don't have a burning hole in your pocket) about economics. However, if you invest in others, you will only add stress to your life as you watch them "play" with your investment. Another unfortunate byproduct of you letting others speculate with your money is that they inevitably become unscrupulous and loose their integrity with the way they use that money. You will be contributing to the lack of solid values in our society. </p>

<p>Ok, if you must invest some... I like a company called Saturna Investments (haha).</p>

<p>Best of luck.</p>

<p> </p>

<p>David, historically, the only way to outpace inflation is by investing. If I put enough money is a bank savings account today to buy a loaf of bread, in 10-years that account won't have enough money in it to buy a loaf of bread at whatever it costs in 10-years. Although I full heartedly agree that I wouldn't let anyone else manage my money. There are quite a few good trading options available: Scottstrade, Ameritrade, etc. And as I said, with just a bit of due diligence on the individual investors part, it isn't all that hard. If nothing else, you simply buy an index fund. While we are talking about "low-quality" investments, I would add mutual funds to that list. As I mentioned before, when I see the prospectus of my wife's 401k I just shake my head- all but two of the mutual funds in there fail to even match the index they are up against. But it isn't all the fault of the mutual fund managers: the SEC hamstrings funds by requiring that no single fund invest more than 5% of it's assets in any one stock. This means the fund managers have to find at least 20 stocks to buy. And not just any 20 stocks, 20 stocks they hope will beat the index. No easy feat as the numbers bear out. Now in all fairness, the SEC does this to protect the consumer. You just have to love government regulation.</p>

<p>If you are in your twenties save, save, save.</p>

<p>Years ago I was on a cruise where I commented to an elderly gentleman on how compounding money is the eighth wonder of the world. He said, "No Bill, it's the first wonder of the world. Most people don't realize it!"</p>

<p>Pay yourself first, that way you won't miss the money. Most people recommend 10% as a place to start. Investing in tax-deferred investments (IRAs etc) can reduce your preceived income and tax liability this year. There's no secret to having money in retirement, just live within your means. If you buy a new car every 5 years you're depriving yourself of significant income later as most cars now last around 10 years. If you put away your 10% every check you won't ever have to worry about the future. Do you really need the newest camera, or would you be better off waiting another year so you can invest in your future?</p>

<p>I just retired from a long career in Advertising. Bad timing as far as all the investments I socked away. House is worth considerably less, investments are worth considerably less, liquid funds are worth considerably less. Who would have guessed that doing all the right things every step of the way would end with a faceless white-collar highwayman at the end of the trek?</p>

<p>The only investment that paid off, and continues to pay off, was investing in myself. Do whatever it takes to become better. When things get tight the competition gets stiffer ... being better for the same money gives you the edge.</p>

<p>You are young ... put everything you can spare into improving yourself and your product ... because while you can save in increments, making more money faster, and getting better faster, pays much bigger dividends long term ... both financially and personally.</p>

<p> </p>

<p>Here's my take. At age 51, I plan on retiring around age 57.5. This will give me a decent amount from my NJ teachers pension and I will have weaned off enough financial liabilities by then to only have my house to consider. Stay and pay, or leave and relieve, lol. Of course we can never predict our health or other serious calamities, but if all stays steady that will be the plan. As far as investments, I have 403B and older 401K and a LOSAP which is a public investment given to some volunteer service groups for community involvement (example: volunteer fire, rescue, aux. police etc.) Suffice it to say that besides assuming I was doing all the right things, I have taken big losses on my investments, have used virtually all of my bank savings, taken large sums of equity out of my house for repairs and kid's college, and maxed a few credit cards. If I had to do it all over again, I would have never used the 403B/401K route. I have lost over 30% of what I have invested. It's not easy to give any advise because every route I have taken has bitten back badly.</p>

<p>Dave W. makes my point entirely. Sorry for your losses Dave, but I generally find that to be the case of many investments. Lots of people think it's the bee's knees when things are good, then the ultimate evil when things don't do so well. Neither is really true, but it does show that there is always a better plan than simply investing in markets.</p>

<p>When the time comes, I'll be pushing a grocery card down town, with all my belongings in it. Wonder what my lenses would be worth then...</p>

<p>That's funny Herma ... sort of.</p>

<p>What is really funny is that the ONLY thing I spent money on that appreciated in value was the initially expensive Leica M lenses for my rangefinder camera. Every one of them has beaten inflation and economic downturns. Go figure. </p>

<p>However, in reality, unless you are in the commercial sector and quite talented at it, anyone involved in creative endeavors should seriously consider living modestly and reduce/keep debt to minimum. If you are young, take the current economic disaster as a lesson, because one thing is certain ... it'll happen again.</p>

<p>Invest in yourself ... at least if that fails, you have no one to blame but yourself.</p>

<p> </p>