With the many competing priorities inherent in running a small business, it is no wonder that retirement planning is too often overlooked. There are approximately 25 million businesses in the United States, but only one out of 12 of these businesses have set up a company retirement savings plan.
If you are one of the business owners without a retirement plan, you should probably consider creating one. Business owners are often reluctant to set aside money for retirement because they make investing in their business their first priority. However, investing solely in one of anything – even your own business – can be a risky strategy. It may be wise to strike a balance between setting aside capital for personal and retirement goals and fueling the business.
Many owners rely on the value of the business as a primary source of retirement funding. Fifty percent of owners do not have an IRA, and only 1 out of 3 have a 401k plan through a former employer.
Depending solely on the value of your business for retirement income security exposes you to a number of potential risks. Your marketplace could change, a key employee could leave, or a business downturn at the wrong time could jeopardize your retirement income security. Also, consider the financial future of those who contribute to the success of your business. Will your employees have the assets to sustain them in retirement?
Related to retirement, small business owners should consider:
- Finding the right retirement savings plan for themselves and the company
- Additional executive benefits if appropriate
- Business continuation strategies (Preparing the business itself for your potential departure)
Continue reading the articles listed below, or let NewRetirement match you to a qualified small business retirement planning specialist.