Every business owner should make it a point to think of themselves first and business matters second, especially since they are themselves so crucial to the proper functioning of it!
Planning for Your Retirement as a Business Owner
It always pays to have a nest egg so that you won’t have any worries about your future. At present, everything may seem secure and stable - you are running a profitable, if small, business and funds are pouring in. However, give a thought to when you retire and remember that lots of things can change over time.
It is always best to be prepared for what the future might bring. To that extent, a sound retirement has become a necessity in this time and day. Here are some points to consider:
- Always Put Yourself First – As the owner and central stakeholder of your business, you hold first right to any cash flowing in.
- Do Your Research on Retirement Plans – There are numerous retirement plans available to mid-market business owners. Learn which one is the best fit for your specific needs.
- Consult a Financial Advisor – Retirement plans have many nuances that you could easily overlook, unless you’re an expert yourself. Refer your needs to a financial advisor who will help you figure out the amount you should put aside every year, as well as which retirement option is best for you.
- Take Stock of Your Post-Retirement Plans – Think about what you want to do after you retire. Consider your interests, hobbies, any places you want to visit, etc. Jotting down these aspects will make things clearer for you.
- Act Today! – As far as retirement planning is concerned, the sooner you act, the better. Don’t put it off for "someday."
- Better Late than Never – Do not ever think that you’re too old to save for retirement, starting now. There are numerous examples of people with small businesses who jump start and accelerate their savings percentage in their 50s to reach their retirement goals!
- Divide and Conquer – Trying to manage the retirement fund on a yearly basis can be daunting. Instead, save some money on a monthly basis to soften the blow.
- Remember, Retirement Money is Off Limits – No matter what happens, do not use that money. Not only will it jeopardize your retirement plans, any amount withdrawn will be income tax deductible, and if it is transacted before you are 60, another 10% will be charged as penalty.
Ideal Plans for Small Business Owners
There are a number of retirement options for small business owners. These include the SEP IRA, which is the best option if you are the sole employee of your company. It is cheap, easy and readily available online. Then there are SIMPLE IRAs for businesses with 100 or fewer employees.
Also very popular for owners are 401(k) plans for businesses with at least 25 employees. Although a sizable fee is charged, the main benefit of these plans is the loan that participants can take against the contributions they make. There are profit sharing plans as well, but they do well for firms reaping consistent profits.
Despite what you may think, small business owners can also work around a good retirement plan – so start planning yours now!