Tips on retirement planning for small business.
Derek Tallent
By: dtallent
Read in 6 minutes

Retirement Planning for Small Business Owners

A retirement plan is usually part of the benefits package when you work for a large corporation. But as a small business owner with a limited budget, retirement planning could seem out of reach.

It is easy to get caught up in the present with all the things that need to get done to run your business. Many business owners focus so much on the present that they don’t plan for their future. That’s a problem. It can be a nightmare to finally make it to retirement and have no finances to speak of. Yet, with a little planning, you can ensure that doesn’t happen.

Here are 5 things you can do for retirement planning.

Have an Exit Strategy

Very few business owners get to a retirement age while having a plan to actually retire. If your small business lasts until your retirement, you need to know what your plan of action is going to be. Are you going to liquidate and sell your business, or are you going to try and keep it going?

If you want it to keep going, you need to figure out how it is going to run without you. Even if you want to sell your business, you need to think long-term about how you are going to do so. You may want to get a flexible retirement plan that allows you to sell your business when to choose to (it’s recommendable to do it when there is a market for it). For more information on how to sell your business, take a look at this CNBC Article.

Build a Retirement Planning Strategy

If you want to retire comfortably, you need to start building a retirement plan as soon as possible. A retirement or pension plan is what will give you money on a monthly basis after you retire. You first want to figure out how much money you will need to keep up with future living expenses. This will give you an idea of how much you need to save. Most banks offer worksheets and calculators that can help you figure out future living expenses.

Get a Financial Advisor

There are a variety of ways that you can save money for your retirement plan. There are 401ks, Simple IRAs, SEP IRAs, etc. If your mind goes blank when hearing these terms, don’t worry. Most business owners may have a basic knowledge of these terms. But they likely don’t know the ins and outs that each of them involves or their own options to build a strong and stable retirement plan.

There is one saving grace about retirement plans:

You don’t have to build them alone. There are thousands of financial advisors across the country that specialize in helping business owners set up and manage pension plans. For some tips on finding the right financial advisor, you can read more on the subject here.

Diversify Your Retirement Planning

One thing that financial advisors will likely recommend is diversifying your plans and finances. Putting all your eggs in one basket can have disastrous results. The first thing you need to decide is the type of pension plan you will set up for you and your employees (if you have any). For more information on the different types, you can get a quick rundown here.

Once you figure out your pension plan, you also will likely want to start investing any extra money you can. One of the simplest investments you can make is into a target-date fund that will automatically adjust the balance of your fixed income (bond) investments and stocks based on your age. Most financial institutions offer target-date funds.

For some more tips on saving and investing while running your business, you can check out this article.

Take Advantage of Your Situation

At times it can seem like everything is more difficult as a small business owner, but in reality, there could be a lot of opportunities open to you. Many financial institutions are looking for business owners willing to invest in their 401ks or IRAs. This means that they will likely offer you better benefits and rates than if you were an employee in a large company, and they may even reduce their fees for things like financial investors. Be sure to research the different types of financial institutions in your area to see if any of them are likely to benefit you in your current situation.

We hope that this article eases some of your concerns over your future and retirement. Retirement planning for small business owners can be quite stressful. But if you follow these tips and get a good financial advisor you should be able to retire comfortably. Be sure to also head on over to our website to get even more tips on marketing, financing, and managing your small business.

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