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The Retirement Every Small Business Owner Deserves

The retirement every small business owner deservesPayroll. Accounts receivable and payable. Inventory. Marketing. Taxes.

Small business owners have plenty to think about and a long list of things that have to be done—today. Maybe that’s why succession planning and saving for retirement are so often put off until tomorrow. Then a year or many go by and they’re not any closer to securing retirement.

Here’s the kind of to-do list you can enjoy when you’ve planned and saved for retirement: visiting all of the national parks. Going to family reunions. Cruising the Mediterranean. Volunteering at a local museum, animal shelter, or library.

A recent CNBC/Financial Planners Association survey found that small business owners invest 70 percent of their wealth in growing their businesses. That may be good—or even necessary—for business right now, but ignoring the future is no way to prepare for it.

What Is Your Dream Retirement?

In the 2014 Transamerica Center for Retirement report, 40 percent of those surveyed put travel at the top of their dream retirement list. Spending time with family (26%) and hobbies (16%) followed.

For many small business owners, work is part of who they are. You don’t have to give that up in retirement. More than half (52%) of the people, not just business owners, Transamerica surveyed plan to work after their retirement, either by remaining in the same field, by making a career switch, or by starting their own business.

How To Save for Retirement

The more preparation you do now, the better prepared you will be to enjoy your retirement as much as you enjoyed building your business. Small business owners have several choices of tax-advantaged ways to save for retirement, and to help their employees do the same:

  • SEP IRA (Simplified Employee Pension plan) is for the self-employed, partners, and owners of corporations. Essentially, a SEP is an employer sponsored plan that allows for an employer to make a profit sharing contribution on behalf of employees including the business owner.  The contributions are made to the Traditional IRA of each eligible employee. The contributions are tax deductible for the employer which is a great tax incentive to offer the plan for your business.
  • SIMPLE IRA (Savings Incentive Match Plan for Employees) is a salary-reduction plan for small businesses such as self-employed people, partnerships, or corporations.  Small businesses are defined as employers with no more than 100 employees. The SIMPLE operates like a 401(k) without the hassle of reporting and additional compliance requirements associated with 401(k) plans. To compensate for the ease of administration, this plan has mandatory employer contributions which may either be profit sharing or matching contribution.
  • Individual 401(k) plans are designed for small businesses that have no employees other than the owner, their spouse(s) or partner(s). They work the same way as other employer-sponsored 401(k) plans. Since there are no employees, nondiscrimination tests which are typically associated with regular 401(k) plans are not applicable.

Learn How to Get Started

Here’s one more important thing to add to your to-do list: download our report, Control Your Retirement Savings the Easy, Affordable Way: Tax-Advantaged Plans for Small Business Owners, to discover how self-directed retirement plans can help you save time and money. 

Tax-advantaged retirement plans for small business owners

Self-Directed IRA Basics Report

Learn about your investment options, self-employed retirement account plans, and more.

Download Now

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