Tips to save for retirement.
Small business owners have probably devoted a lot – if not most – of their personal savings into achieving their career dreams. But what kind of impact has this had on their retirement funds?
The Small Business Association found that more than nine million self-employed individuals are without retirement plan coverage. Small business owners are responsible for setting up a plan. If you’re a small business owner, take a look at our tips to help you save for the future:
Define your objectives.
According to the U.S. Department of Labor, you need 70 to 90 percent of your pre-retirement income to maintain your current standard of living.
“Put simply, most people are so busy running their business that they neglect to save for their own retirement,” Don Boetger, senior vice president, Retirement Services at Northwest, says. “Business owners often assume that the business will be their retirement fund, but it can be a difficult transition to make.”
Take a look at what you are currently living off of and what you have saved up so far and sit down with a financial advisor to lean how much you should be putting away each year to meet your standard of living.
It’s not easy to play catch up, especially if you’ve waited too long and are not willing to make serious changes to your standard of living. Once you figure how much you should be contributing to your retirement plan, set up your account to automatically deduct money each month.
Plan your exit strategy.
“You should work to make your business operable without you,” Boetger says. “This will make it easier to sell. It’s always a good time to consider potential buyers for your business so that you can someday retire.”
Who can run your business? Should you sell it to a relative, employee or a partner? Do you want to retain partial ownership or be done entirely? These are just a few of the questions you should be asking yourself as you plan for retirement.
Think about your team.
Do you have a retirement strategy in place for your employees? While you’re looking into a retirement plan for yourself, consider doing the same for your employees. Having a retirement plan will help attract and retain the best workers, leading to increased productivity and work satisfaction. Ask them what they are hoping to get out of their retirement and plan if you want to contribute to their account, and if so, how much. This will help you figure out how much you can feasibly put away for your own retirement.