How Small Business Owners Can Successfully Plan for Retirement
April 24, 2015
Retirement is a topic that’s important for everyone, but especially for successful entrepreneurs who have to also consider the continuity of their businesses. As a small business owner, you know that no one cares more about your business than you do. So when you’re planning for your own retirement, you need to plan for your business as well. Here are some things you need to know.
Consider Your Options
As a small business owner, you have a wider range of options for saving for retirement than your friends with regular employment. Indeed, one of the benefits of being an entrepreneur is having the flexibility to determine exactly when you will stop working. Nevertheless, these types of decisions are best made with the consultation of a trusted advisor. Speak to your small business accountant about possibly putting your money in a regular or Roth IRA (independent retirement account). You also have some options that are just for small businesses such as SIMPLEs (Savings Incentive Match Plans for Employees of Small Employers) and SEPs (Simplified Employee Pensions). The bottom line here is to do your retirement research and consult an expert.
Take Care of Your Team
If you’ve got employees, they will need a retirement plan too. When you are trying to decide which type of retirement plan to implement for your employees, think about whether you want to match employee contributions, or make contributions regardless of what the employees put in. Consider whether high contribution limits are important to you and to your employees. A good retirement plan can be an asset when you’re trying to recruit top talent.
Have an Exit Strategy
Think about what might happen to your business after you retire. You might want to sell it to a company that complements or competes with your business. Or, you might want to have someone in the company take over running the company. In either event, you may be able to use your business to fund your retirement. If you sell the business outright, you can use the proceeds to live off in retirement. If you have someone take over the business and run it, you may be able to negotiate a continuing role to provide more income in retirement from the business.
Think of Your Dependents
When you’re planning for your retirement, you should also think about what will happen after you pass away. If you want to provide for your spouse and/or children, you need to make provisions for that in your retirement plan. If you’re really lucky, you could leave the business as a legacy, so that your heirs could benefit from that income after you pass away. Retirement lasts longer than ever, and advance planning is critical. By planning ahead for your business and yourself, you can have the retirement you’ve always wanted.