Retirement Strategies for Business Owners

Three Common Approaches to Saving for Retirement

When it comes to saving for retirement, business owners have a few extra challenges to face.

For one, there is always the temptation to reinvest money back into the business instead of setting it aside for the future.

Additionally, when your business is just starting out, it can be difficult to find extra money to put towards retirement savings.

However, despite these challenges, there are many ways for business owners to save for retirement effectively. The key is to start early and to be mindful of where you are investing your money.

1

As a business owner you can still contribute to a 401(k) or IRA. If your business offers a retirement plan, be sure to take advantage of it and contribute as much as possible.

2

If you don't have a retirement plan through your business, we recommend reviewing qualified (tax-advantaged) plan options such as: 401(k), solo-401(k), SIMPLE IRA, SEP IRA or cash balance plans.

3

You can also invest in a diversified investment portfolio through a taxable brokerage account.

By using these strategies, business owners can save effectively and plan to enjoy a comfortable retirement.

How Much Should I Contribute to A Retirement Account if I Am Self-Employed?

This answer depends on the goals you have set for yourself.

However, if you are self-employed, you will often want to contribute more to your retirement account than someone who is employed by a company. This is because you do not have an employer match, which means you will have to save more money on your own.

When you’re deciding how to plan your contributions, you should consider:

How much income you want to replace in retirement. A good rule of thumb is to aim to replace 70-80% of your current income.
Consider long-term goals such as a vacation home, travel during retirement years, and basic living expenses.
Factor in any other debts or financial obligations you have.

Once you've considered all of these factors, you can start to calculate how much you should contribute to your retirement account each year. A good rule of thumb is to save at least 10-15% of your income for retirement. As a business owner, you must calculate the return on invest and risk of putting more back into the business. We generally recommend maximizing retirement contributions in order to diversify your net worth.

However, if you're behind on retirement savings, you may need to save more.

Feel Like Your Retirement Savings Are Falling Behind?

If you feel you are behind on your retirement savings, there are a couple things you can do to try to catch up.

First you want to make sure you are contributing the maximum amount to your retirement account so you can make up for lost time.

You should also make sure you have a plan set for retirement that you are actively following, and you are saving money according to your plan each month or pay period.

If you find that you are still behind, you may want to consider working with a financial advisor to help you get on track. We realize selling the business may be a part of your plan. Let us help review your entire balance and integrate your business plans with your personal financial plans.

How Can I Automate My Retirement Savings?

As a small business owner, you have a lot on your plate.

You likely don't have time to worry about saving for retirement each month, which is why it's important to automate your retirement savings.

This can be done by setting up a retirement plan that will automatically deduct a set amount of money from each paycheck and put it into a savings account. This way, you can make sure you're saving enough for retirement without having to think about it every month.

There are a few different types of retirement plans available to business owners, so be sure to do your research to find the one that best suits your needs.

A few popular options include:

401(k)s

SEP IRAs

SIMPLE IRAs

Talk to us to learn more about each type of plan and how it can benefit you.

Once you've chosen a retirement plan, set up regular contributions so that you're automatically saving each month. This will help to ensure that you have enough money saved when you retire.

Make sure to review your contributions regularly to make sure you're on track to reach your retirement goals.

Small business owners have a lot of responsibility, but that doesn't mean you can't enjoy a comfortable retirement. Automating your savings is a great way to make sure you're prepared for the future without having to worry about it each month.

We are happy to review all of the retirement plan options for business owners to help make the best decision.

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