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If you are self employed like I am, developing a retirement strategy totally falls on our shoulders. And even though we might not be participating in an employer based pension plan, there are a number of ways in which we can save and better prepare ourselves for the future.
My financial planner has me contributing to a SEP (Simplified Employer Pension Plan) IRA which is one of four retirement plans available to the self employed. The other plans include the Individual 401k, Defined Benefit plan, or Simple IRA.
Contributing to a SEP IRA isn't our only retirement option. Here's the run down of other ways we are preparing for our retirement:
Investment / Real Estate. As a retired Realtor, I'm comfortable managing property which is why our investment portfolio also contains a smattering of real estate holdings. Real estate provides us with tax advantages now and rental income in the future. And in case of a financial emergency, real estate can also be sold.
Bill reduction. Lowering your debt isn't often thought as retirement planning, however it does mean that less income will be needed once you hit those golden years. Our goal is to pay off our mortgage by age 60, which means living on a reduced income will be easier to manage.
Medical Insurance. Uninsured health care costs in our retirement years can mean selling some of our important assets such as our homes or other investments. While lots of retirees rely on Medicare to cover their medical debts, we plan on investing in private supplemental insurance (Medigap is one great example) to lower our out-of-pocket medical costs.
Working part time. For many people, working during retirement IS their retirement plan. My parents raised livestock clear into their 80s, while other retirees I know continue to work by gardening, writing, maintaining a blog, or working craft fairs. My husband and I also plan on working part time in our retirement as writers and artists.
For the self employed, developing a retirement plan now will ensure a comfortable living during your retirement years. For more information about retirement planning and contributing to a self employed retirement plan, your financial planner can help.
More from this contributor:How to make up for a late start to retirement.