There is an abundance of information around retirement planning for business owners. Despite the information available, a large percentage of businesses still do not have a plan in place. Consider these seven ways to ensure your retirement is as successful as your business.
1. Create a Succession Plan
A realistic succession plan with a solid exit strategy is essential, especially if you’re counting on income from the business after you retire. Only 36% of small business owners have established some type of business continuation plan.
Source: Sizing Up Small Business Owners: Product ownership Trends. Report. Windsor: LIMRA, 2015
2. Calculate How Much Income You’ll Need In Retirement
Retirement planning requires having a vision and knowing how much you will need throughout retirement. Only 78% of small business owners plan to sell their businesses to fund their retirement.
Source: FPA/CNBC Business Owner Succession Planning Survey, April 2015
3. Start Saving
You can’t rely on your business as a retirement plan since you don’t know what the future holds, so be sure to have retirement savings outside of your business. About 25% of salable businesses end up having successful exits.
4. Keep Contributing To Your Retirement
Although it’s tempting to take a break from saving, that rarely works—instead, make small, consistent contributions over time, and you’ll save more than if you made larger contributions later. 34% of entrepreneurs lack a retirement savings plan.
Source: Manta Survey, 2017
5. Consider a Company Retirement Plan
If you’re a sole proprietor, the tax savings from a company-sponsored plan could fund your contributions. Have employees? A plan can help you recruit and reward them while building loyalty. Up to 100% of employer contributions to a company-sponsored retirement plan may be tax-deductible to the business. Retirement planning is not just for you as a business owner.
Source: Internal Revenue Service
6. Supplement Your Social Security Income
Only 33% of the average U.S. retiree’s total retirement income comes from Social Security. The other 67% of retirement income needs to come from other sources.
Source: Social Security Administration, Fast Facts and Figures about Social Security, 2017
7. Plan for Medical Expenses
Medicare only covers about 62% of basic healthcare expenses.
The average 65-year-old retired couple will spend about $270,000 on healthcare during retirement.
Source: Employee Benefit Research Institute, 2017
As you plan for the future of your business, take the time to plan for your own future. Schedule your no-cost consultation today.
This material is for educational purposes only and should not be viewed as financial, tax, or legal advice applicable to each individual; please consult a qualified professional regarding your individual circumstances