Retirement Plan Basics for Small Business Owners

podcast Oct 12, 2021

Retirement Plan Basics for Small Business Owners

Today’s episode is focused on the basics of retirement planning for small business owners. Owners are busy wearing multiple hats on any given day. Sometimes, it’s hard to think about retirement when you are immersed in the daily minutia of running a business. 

However, it’s important to take some time envision what retirement looks like, it will be here sooner than you realize. Even if you have no plans to retire, creating a plan can prepare for the unexpected hiccups life may throw your way. 

With so much uncertainty surrounding the stability of social security, business owners should ensure they have multiple sources of retirement dollars.

If you have adopted a zero tax, low salary strategy and you do not have a retirement plan, you won’t be able to depend upon social security. 

3 Steps to Start Saving For Retirement

 

  • Determine your ideal retirement. Where do you want to live? What does retirement life look like? 

 

  • What are you going to do with your business? How does your business factor into your retirement? Are you planning to use your business to fund your retirement? Do you have a succession plan in place?
  1. What are your monthly expenses? It's not going to be an exact science, but you have to start somewhere. You can start with 80% - 100% of your current expenses.
  • Use an online retirement calculator to assist with the calculation (www.bankrate.com is one of my favorites)
  • A financial planner can also assist with the calculation. If you don’t have one, feel free to reach out to me: [email protected]
  1. How are you going to save for retirement? What type of retirement vehicle are you going to use? 

Retirement Vehicles For Small Business Owners

Before you can determine which vehicle to use, you have to answer a few questions.

  • Do you have employees or do you expect to have employees in the near future?
  • Do you want the employer to contribute to the plan? Or just the employees? Or both?
  • Do You want to maximize the amount you can contribute to the plan?
  • Do you want a plan with a low cost or a plan that's easy to administer?

 Top 5 Retirement Plans For Small Businesses

==> SEP IRA

==> SIMPLE IRA

==> Profit Sharing Plan

==> 401(k) / Roth 401(k) / Solo 401(k)

==> Defined Benefit Plan

All of the plans mentioned above provide tax deferred growth. Employer contributions are also tax deductible. 

In this podcast, I scratch the surface of retirement vehicles. There are number of regulations that must be considered. Be sure to work with a financial professional who understands small business retirement plans to ensure you make the right decision for your business.

Small business owners can join our Facebook Group Smart Money For Small Business Owners https://www.facebook.com/groups/smartmoneyforsmallbusinessowners

Want tips to make your money work harder? 

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