Think pensions are only for teachers, police officers, and government workers? Think again--that's the most commonly known type of pension, but don't overlook the SEP-IRA and other forms of retirement planning.

I've been an entrepreneur for years. Worked on a variety of different projects, including my most recent one, a free hosting company. I had just pushed back retirement until last year, when my accountant told me that I really needed to start putting away money. He said there are ways I can do it that minimize my risk.

The Simplified Employee Pension Individual Retirement Arrangement (SEP-IRA) is a type of IRA available to American entrepreneurs. If you're a sole proprietor, there's aren't any major administration costs, but if you have workers then you all need to be receiving the same SEP plan benefits.

Still not sure a pension is for you? Don't let your life's work go down the drain when retirement creeps up on you. Here's why entrepreneurs (especially) need a pension:

1. SEP Contributions are Deductible

Just like your office expenses and business travel, SEP contributions are completely deductible. This means your CPA can include them each year to ultimately lower your taxable income. A lower bill from Uncle Sam while your pension grows? That's a win-win situation and one that entrepreneurs need to get on board with.

2. It's an Easily Accessible Loan

While it's rarely recommended that you take out a pension loan, sometimes it's unavoidable. Think worst-case scenarios like wild medical bills or another calamity. Avoid a pension loan whenever possible, but it can give you peace of mind knowing it's there. You're effectively taking out a loan on yourself with moderate interest rates, and it can be a lifesaver.

3. You Want to Retire Eventually

Right? While you might love what you do and can't imagine sitting around watching grandkids and playing golf every day, you're going to change. Your health may deteriorate, you might simply get burned out, or maybe you'll decide at age 65 you really want to join the Peace Corps after all. A pension can make retirement possible.

4. It's a Safe Return

Assuming you wait until the appropriate age to withdrawn your pension (often 59 1/2 or older), you'll be enjoying a steady, moderate growth on your investment. This isn't like playing the stock market where risk is high or "investing" in a CD with the current lowball interest earnings. Tax-deductible, untaxed until you withdraw, and with a sweet return, it's just good business sense.

5. Tax-free Growth

There are generally two types of IRAs: Traditional and Roth (a SEP-IRA is traditional). However, you can also look into a Roth IRA, which isn't tax deductible but does offer tax-free growth. Discuss your needs and situation with a financial adviser to narrow down the best route. Either way, you'll be enjoying tax benefits.

6. Your Spouse May Benefit

If one of you has a pension plan but the other doesn't, yet you file taxes jointly, the "non-pension spouse" may qualify for benefits. Then, of course, there are death benefits linked to pensions which vary based on which pension you have. It's one of many ways to care for your loved ones for the rest of their life, along with life insurance and burial coverage.

7. You're On Your Own

As an entrepreneur, you're used to taking risks and caring for yourself in ways most people enjoy from their employer--paying "double" social security and Medicare taxes, taking care of health benefits yourself, you know the drill. Just because you don't have someone else offering a pension for you doesn't mean you should be left out in the cold.

8. It's the Real Deal Rainy-Day Fund

There are many ways to invest money, and some of them are riskier/more lucrative/more immediate than others. There's a reason you'll get stuck with a big penalty if you tap into your pension before it matures: It's your retirement plan. Your nest egg. While other forms of investing and saving can be very complementary, they don't quite "lock you out" and reward you for waiting like a pension. Your future self will thank you.

9. It Gives You Security for Startup Number Two

Many entrepreneurs have numerous careers under their belt, including entrepreneurial pursuits. Maybe you own a software development company today, but you've always dreamed of opening a yoga studio. Even if it's not in the cards right now, it might be when you retire. Yoga studios aren't known for being money makers, however. A pension can allow you to continue to pursue passions and even next careers in retirement while still enjoying a reasonable income.

10. You Don't Know What the Future Brings

A pension is a way of planning for the future when you have no idea what this afternoon may bring. While there's no way to predict what will happen, one thing is certain: You'll always benefit from a nest egg and retirement plan. A small sacrifice today (like a tax deductible contribution on a regular basis) can be your saving grace down the line.

Talk with a financial adviser today to get your pension plan into action.

Published on: Oct 20, 2014