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Retirement planning and your craft business

Did you know that your craft business has the ability to be a key component of your retirement plan?  

If you’re like a lot of crafters (including yours truly), you have a full-time job and work your craft business on the side.  My business was set up with the intention of it remaining part-time until I decided to retire from my school library job.  By this point, the business should be established enough to provide a reliable income stream to supplement our other retirement income sources.  Yes, I plan to continue working even after I “retire.”  That’s just me.  My craft business will provide income AND give me something to do.

These are important points.  Wes Moss, a local money show radio host, recently published a book about the keys to happy retirement:  You Can Retire Sooner Than You Think. It’s an excellent book that puts things in layman’s terms: You can order a copy of it here.

Doing the exercises in the book made me realize that hubs and I might actually be able to retire sooner than we thought. Why? Because as Moss’s research indicates, you really don’t need to have millions of dollars in the bank.  What you do need are multiple sources of income, a paid for house and a plan/purpose for how you are going to spend your time/money in retirement.  Your craft business can actually help in all three areas:  (1) provide a source of income in retirement, (2) provide a source of funds to help pay down the mortgage faster and (3) provide you a purpose in retirement (whether you sew for money or charitable causes).  If your craft business is your full-time business, you have a host of other retirement planning vehicles available to you – check with your CPA or business advisor.

I am somewhat of what Dave Ramsey refers to as a money nerd.  It’s true when he says that basic money management is mostly about behavior.  Once you learn (and practice) the simple behaviors that really work – live on less than you make, pay yourself first, learn to say no and practice delayed gratification – money management (and life with your spouse) gets a whole lot easier.  It also puts you in the driver’s seat of your life.  On it’s own, money doesn’t buy happiness, but having some savings does buy you time or the ability to do/get what makes your heart sing – or allow you to leave a job that’s making you miserable.

If you, like me, are still many moons away from official retirement age, but are considering retiring early – be sure you build up the “non-retirement” accounts in addition to your 401(k).  Financial rule of thumb is you can safely expect to withdraw $1,000/month from every $240,000 in assets in an “income generating” portfolio.  For years, we’ve concentrated on putting money into our 401(k) and 403(b) plans.  Now, we’ll shift gears to put more money in the non-retirement kitty.  Who knows?  I might actually be able to “retire” before my pension eligibility date.  That would be a good thing!