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How to Save for Retirement While Running a Business Entrepreneurs who put all their eggs in a single savings basket put themselves at risk.

By Rashan Dixon

Opinions expressed by Entrepreneur contributors are their own.

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Freelancers, solopreneurs and small-business owners take huge risks by choosing self-employment over traditional careers. Not only do they give up the security of steady paychecks, but they must also give up the perks that come with the cash. Most benefits, like paid time off and gym memberships, don't matter much to people in control of their own schedules. Others, like privileged investment vehicles, sting a little more when they vanish.

Entrepreneurs love to put their savings back into their businesses, even when they could use more personal financial security. No amount of money can delay the future, though. What happens when entrepreneurs decide to step away from work and live off their savings? People who don't make a conscious effort to save money in the short term usually end up in tough situations down the road.

When it comes to saving for retirement, diversification is key. In France, citizens are protesting by the hundreds of thousands in response to proposed changes to the country's historically generous pension plan. Entrepreneurs who put all their eggs in a single savings basket -- no matter how secure that basket may appear -- put themselves at risk of seeing those savings wiped away.

Related: These Strategies Help Entrepreneurs Combat Anxiety and Depression

Plan for the future without sacrificing your (or your company's) present by following these top tips for entrepreneurial retirement planning.

1. Pick a variety of vehicles.

Maybe your business will make you wealthy beyond imagination. Maybe not. Entrepreneurship is a risky game. But while you can't predict the future, you can put your money to work without taking on the same amount of risk with your savings as you do with your business.

Thanks to inflation, parking your money in a savings account will likely cause you to lose purchasing power over time. That's why investment startup Round recommends investing in a variety of asset classes to reduce risk. New investors should look for stability by finding alternative asset classes and bonds to complement stocks and other investments.

A diverse portfolio should lead to the steady growth all entrepreneurs crave in their retirement. By viewing your retirement as a holistic investment plan, you'll be able to enjoy the payoff down the road when it really matters.

2. Plan an exit strategy.

Young college grads with weeks-old companies don't need exit strategies. Seasoned entrepreneurs, on the other hand, should know exactly what to do with their businesses when they want to retire. Creating an exit plan for that inevitable day can save you a ton of stress when you finally decide to move on from your company.

Sean Peek, contributor for the U.S. Chamber of Commerce, recommends a six-step process for entrepreneurs to design smooth exit plans. Start by arranging your finances, then consider your options. Some people transfer ownership to their longtime employees, while others sell to investment firms. Pick and groom new leaders well before you head for the exit, and don't forget to inform your customers and employees about the move. Even if you don't plan to retire for several years, designing your exit plan in advance can save you from major headaches when the day arrives.

3. Weigh and attack your debts.

Not many entrepreneurs go through life without a little debt. Whether you have business loans, investors or personal lines of credit, get ahead of potential problems by reducing or eliminating your debts before you start thinking about saving elsewhere.

Mark Cuban once called debt payoff the best investment a person can make. Credit cards and personal loans carry much higher interest rates than savings accounts or average market returns. You may feel responsible maxing out an IRA while paying the minimum on your credit card, but if your IRA earns a generous 10 percent and your credit card charges 25 percent, you're losing the battle.

Don't be afraid of debt, but don't embrace it unnecessarily, either. Evaluate your debts and investment opportunities, then pay off the albatrosses aggressively so you can use that money elsewhere.

Related: Entrepreneurship Often Involves Uncertainty. Here's How to Deal With It Productively.

4. Get a 401(k), anyway.

It's true: Even if you work as a company of one, you can still enjoy the benefits of a 401(k). Referred to as one-participant 401(k) plans by the IRS, these plans make you both the employee and employer. While that means you're the person matching your own contributions, it also means you can effectively double the amount you put away, boosting both your savings amount and your tax breaks.

Other entrepreneur-friendly funds offer their own perks and drawbacks. SEP IRAs, for example, operate like traditional IRAs for small business owners. If you have employees, you have to contribute to their retirement, as well as your own, under an SEP IRA. However, you can also wait to open and fund an SEP IRA until tax day, more than three months after the year officially ends. SEP IRAs make excellent options for people with no or few employees or people who aren't sure how much money they'll make until the end of the year.

Ask any retiree, and you'll hear the same story: Retirement sneaks up on people. The longer you wait to plan for yours, the less choice you'll have about how and when you step away from your business. Use this opportunity to make your own choices about your future, before your situation starts making them for you.

Rashan Dixon

Entrepreneur Leadership Network® Contributor

Co-founder of Techincon and Senior Business Consultant for Microsoft

Rashan Dixon is a senior business systems analyst at Microsoft, entrepreneur and a writer for various business and technology publications.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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