Retirement Planning for Small Business Owners

Retirement Planning for Small Business Owners

The way small business owners approach retirement planning today is somewhat unsettling. Just 39% of business owners age 45 to 64 had Roth IRAs or traditional IRAs, and this group is the closest to retirement age. 29% of this group were saving with different 401(k) accounts. Of the population at large, only 32% of 45 to 64-year olds have over $100,000 saved for retirement.

Why isn’t the number 100% or close to it? What would it take to increase the number of small business owners saving for retirement? Here are four steps you can take today to start retirement planning.

1. Determine Living Expenses
Any retirement planning and strategizing must begin with a baseline figure: your living expenses during retirement. We find that many small business owners begin taking retirement planning more seriously once they realize how much they’ll need to support themselves after they retire.

2. Begin a Diversified Retirement Plan
Opening and administering a diversified retirement plan – such as a Simple 401(k), Solo 401(k), Simple IRA, or SEP-IRA – is pretty simple and inexpensive. There’s no need to shovel your money into it all at once. Rather, the funds in your account will help to diminish your tax bill now and add to the retirement nest egg you’ll rely on later.

3. Invest Simply
Keep it simple. Most successful investment strategies do not significantly change their holdings based on market conditions and consist of a diverse mix of low-cost ETFs or index funds. The slow, steady gains of funds that invest in the entire U.S. stock market, emerging markets stocks, and developed foreign markets tend to outperform the volatile up and down of individual, low-cap stocks. Remember, retirement planning is a marathon, not a sprint.

4. Hire a Financial Planner
Most important for small business owners planning for retirement is this: hire a professional! OptiFour Integrated Wealth Management has been helping small business owners just like you discuss, create, and achieve their financial and retirement goals for over 25 years. If you are ready to begin your journey with the help of a dedicated financial professional, visit the OptiFour Integrated Wealth Management homepage to find out about our comprehensive suite of services.