The average age of onsite installers is rising. While efforts are being made to attract young people into the decentralized wastewater industry, many of you have fewer working years ahead of you than behind you. Whether you are in that group or just starting out, now is the best time to take a more serious approach to retirement planning. Make a New Year’s resolution for 2023 to get your fiscal house in order.

I have been an active stock trader for 40 years, both making my own investments and contributing to employer retirement programs. Whether you go it alone with retirement planning, work with a financial adviser or do a combination of the two like I have, the key to success is to getting started.

And starting as early as possible. Every year you wait is a lost opportunity to watch your retirement nest egg grow. This might seem silly to a 20-something equipment operator who can’t imagine ever retiring and has many bills to pay for rent or a mortgage, vehicles, or a growing family. But every dollar you can set aside now is turbocharged over time through the power of compounding interest.

What do I mean by turbocharged? To illustrate, go to www.investor.gov and then to the compound interest calculator. I punched in this example: If you start at age 20 adding $50 per month to an investment account with an average return of 9% (The average stock market rate of return since 1925 is 9.7%), you would have $204,300 at age 60. You have only paid $24,050 into the account over that time, but growth over time has worked in your favor to build the account dramatically.

So the lesson is to start young, even if you can only contribute a small amount to your retirement account. But even if you are older, you can still grow your money through regular investing, even in small amounts. Let me give you a personal example:

Back in 2004, I joined a group of five friends to start a stock club. We meet monthly to choose companies to invest our dues in. For most of the past 18 years, we each contributed $50 per month, but that figure rose to $100 a few years ago. Our spouses went along with our club dues, thinking we would each cash out the money some day and go on a nice vacation. However today we could probably make a trip around the world on first-class flights as we have each amassed close to $50,000.

I am ecstatic with the return on our club investments. But you shouldn’t read into this that I am any kind of investing or retirement expert. I would encourage you to rely on the professionals when it comes to your own retirement strategies. But as we look forward to another year of hard work, I will share a few ideas to consider as you inch toward retirement … whether that time is coming into the view of your headlights or is 40 years down the road.

Build a relationship with a financial adviser

Financial advisers will not just guide you through the complexities and risks of investing for retirement. Just as important, they will help you efficiently extract those retirement funds when you need them for your golden years. Monthly payout from a variety of retirement accounts comes with tax risk, and you probably want to shield Uncle Sam from your funds as much as possible — legally, of course. Your adviser will help you balance the draws from funds that will be taxed as normal income and those that have grown tax-free over the decades. Blended with Social Security payments and pensions, the goal is to enjoy the greatest retirement income, while paying the least amount of tax. And this accounting puzzle is probably more complicated that most of us want to handle on our own. Interview a number of advisers and find one you are confident can help you navigate this process.

Prepare for Social Security

If you haven’t done it already, go to the Social Security Administration website (www.ssa.gov) and create a personal account. If you are married, have your spouse do the same. You can start this process whether you are 16 or 60 years old. The SSA tracks your annual earnings on a chart and updates the amount of your benefit for the minimum age of 62, the Medicare age of 65 and, your full retirement age, likely somewhere 65 to 67, and at the maximum benefit at age 70.

The benefits roughly grow 8% a year between age 62 and 70, and a sliding scale shows you the benefit at any month between the minimum and maximum to help you time precisely when you want to start collecting. For small-business owners and employees who typically don’t receive a pension, Social Security is a critical fixed benefit you can count on. It truly gives security as it balances the risk and reward of 401k or other retirement accounts that can fluctuate dramatically.

Balance your portfolio regularly

Review your various investments regularly or have periodic conversations with your financial adviser about where your money is being placed. Some stocks and funds are more growth oriented: They are riskier but also can provide greater reward. More conservative stocks or funds with an income focus won’t fluctuate quite as dramatically. Basically, think more growth (or risk) when you are young, and think more conservative as you get older. This is because young investors have time to weather economic downturns, while those closer to retirement want to protect gains and will need access to the money sooner. Also, while retirement plans for someone in their 20s or 30s might be 100% invested in the stock market, or equities, those nearing retirement might diversify with bonds or high-dividend stocks to provide more reliable income. 

Roth IRA

If you have any money left after expenses, consider funding a Roth IRA (individual retirement account). For 2022, most workers (there are income limits) can put up to $6,000 ($7,000 if you are over 50) into a Roth account. At this writing, Congress is considering a proposal to boost that number to $10,000 for 2023. Unlike pre-tax money sheltered in your typical employer retirement account, money in a Roth IRA can grow and be paid out tax-free. Tapping these funds after retirement is a good way to bring down your taxable income. And the money you contributed to the Roth can be accessed anytime for any reason. However you can’t touch the earnings until you reach 59 ½ years old. Also, Roth funds can be invested the same ways as any retirement account.

Add value to your business

Here’s something you might not think of as a retirement investment — but you should: Regularly spend money on improving your equipment, marketing, and training and benefits for your crew. The tendency of many owners of installing and excavation companies is to slide toward retirement by using older, paid-for equipment and cutting back on staff and workload. While it may be your mindset to work less and avoid debt, this strategy will only lower the value of your business when it comes time to sell.

First of all, you can slow down a little on the day-to-day workload without devaluing your business.

This is a vibrant industry and we are only seeing the demand growing for your services. You have banked all these years on the upside of decentralized wastewater treatment, so this is no time to back down. Find a strong right-hand man or woman to help you manage the crews. Update your equipment regularly rather than run rusty, unreliable machines. Employ social media and other technologies to sell your service and work more efficiently.

Building your business even as you get older may end up being your smartest retirement play. The payoff from selling a successful, forward-looking company — combined with personal retirement savings — can put you in a great position when you eventually drop the shovel for the last time.