A guide to retiring from your internet business

Reading Time: 3 minutes

It’s tough out there. You worked and slaved away and reached success – and now you’re ready to cash it all in and call it a day. But it’s not time to exhale yet – there is a myriad of factors to take into account when retiring as an internet entrepreneur. We’ll talk about it in our blog.

But before we get into it… We are financial advisors in Morristown, NJ, providing financial advice for New Jersey residents as well as folks across the country. Before we get started, you may want to check out these New Jersey finance blogs we’ve written, if they apply to you:

Cost of living in New Jersey

A checklist for moving to Morristown, NJ from NYC

The New Jersey Double Tax

What is the average income in New Jersey?

What is the New Jersey 529 Plan and should I use it to send my kids to college?

Should you buy a New Jersey vacation home?

40 questions to ask a financial advisor in New Jersey

Gather your resources

Internet entrepreneurs come in many forms. From drop shippers and Amazon affiliates to freelance bloggers, online social media influencers and Etsy shop owners, a significant portion of the working population makes its living online.

The first step to take if you are looking to retire from being an entrepreneur on the internet is to take an accounting of all you have.

Gather up these items:

  • 401(k) statements from past jobs
  • Three most recent years tax returns
  • Statements from any company savings plans. These are typically SEP IRA’s, SIMPLE IRAs, defined benefit plans, etc. This blog covers the basics of employer sponsored retirement plans.
  • Social Security earnings records (if you haven’t started taking it yet)
  • Agreement from sale of your internet business, if applicable
  • Debt and credit card statements
  • Tax lien documentation

Internet entrepreneurs need a retirement income plan!

Once you have all this information consolidated, you will put together an income plan. It’s useful to include:

  • Short and long-term retirement goals
  • Cash flow that is likely to be generated from your assets
  • What your monthly expenses are on a monthly and annual basis

We advise internet entrepreneurs to start with the end goal in mind when creating a retirement plan. Try to sketch out your ideal retirement age and then work backwards into what it would take each year to get there. In doing so, it’s useful to factor in what your net income is (cash flows minus expenses) for each month.

This can be a tedious process.

If you’re overwhelmed, a financial advisor can help you with this process.

Don’t forget about taxes!

It’s a common mistake that entrepreneurs make – of all types, not just internet entrepreneurs – when they retire. They get the income planning right, and neglect one (not so) little tiny factor – taxes!

When you were running your internet business, you probably had unstable periods. You likely had times of great abundance and other times when you were scraping by. Your taxes estimates were paid every quarter but it probably wasn’t always so easy to budget for it given the volatility of income. Sound familiar?

Let’s hope that retirement is a bit more stable. It can be useful to come up with a tax plan that takes into account such factors as your tax bracket currently, what bracket you’ll likely to be in when you retire, etc. Tax planning in retirement is critical because certain benefits, such as Social Security and Medicare, are greatly impacted by this.

Here are a few examples of why tax planning is so important in retirement.

  • Your tax bracket can be bumped up by the amount of income you have when you start taking Social Security. Your tax return from two years ago impacts the premium you pay for Medicare. It’s more influential than you would think so make sure to stay on top of your taxes after you stop your internet business and retire.
  • As the owner of an internet business, you probably have quite a few pieces of computer equipment (microphones, laptops, computers, etc.). The depreciation on these items can possibly be written off for a tax credit. We’re not CPAs – remember to ask your accountant firs though!

Ready to retire from your internet business?

We are financial advisors in Morristown, NJ serving the local community and beyond. If you have questions about retiring as an internet entrepreneur, retiring in New Jersey, moving there, affording to live there, or (like us) are just plain old Bruce Springsteen fans, reach out and send us a message.

Ask Us a Question: