When you work for yourself, it means that you must take responsibility for your own retirement plans. Unfortunately, you won’t be offered a matched 401(k) like you would working for a company. Many surveys have also found that over one-third of small business owners don’t actually have retirement plans set up.
This means that there are a lot of people out there whose futures are holding a huge amount of uncertainty, especially financially. It can be very easy to become distracted by day-to-day responsibilities and other financial decisions which means that you neglect your retirement plan. While it is very important to focus on your business, it is even more important to create a strategy for your retirement.
Losing track of your retirement goals can end up as a costly problem. Here are three great tips to help small business owners prepare for retirement. Let’s take a look!
1) Set goals
When you begin to take note of your retirement, you need to set realistic goals about exactly what you want your retirement to look like. Perhaps you want to be traveling on foreign soils, sipping cocktails by the beach, or simply enjoying life at home. You may even want to buy a yacht and spend a large majority of your life sailing around our wonderful ocean.
Knowing exactly what you want will help you to begin planning. Your retirement plan will come together far better when they are specific as well as measurable. Adding certain time limits can help as well, so never neglect the fine details. You should also set goals regarding your business and how it will function after you leave. You can sell it, hand it down, or even close it completely.
2) Plan your exit
If you are the owner of a small business, your exit is going to be one of the most important aspects of your retirement. You can’t just up and leave one day, so you have to make sure you have meticulously looked at every aspect of your exit and made a plan for it. Perhaps you need to train other employees or figure out who the new owner will be.
You may even want to fund your retirement from sales within the business, so perhaps giving it to someone else or selling it just isn’t for you. There isn’t really a right or wrong in this instance, so don’t allow yourself to stress about it too much. Just don’t leave it to the last minute. Having a financial advisor may possibly help with determining which option is the best for you and your retirement fund.
3) Learn about your retirement savings
Selling a business is the perfect way to fund your retirement, however, that may not always be the best option. Solely relying on the money you receive from the sale is a dangerous way to fund your retirement, so make sure that you research other ways first.
Instead, you should diversify your retirement savings to ensure that you have several retirement plan options when you do eventually retire. At the end of the day, the best thing that you can do is begin planning early.
As a business owner, taking responsibility for your own retirement plan can seem daunting and difficult and even confusing. And while giving more priority and thought to day-to-day responsibilities, preparing for retirement is just as important if not more important. Start preparing for your retirement now so that it doesn’t become a problem in the future.
