Small business owners and entrepreneurs are used to wearing all the business hats and doing every task on their own. Many take the same approach toward retirement planning — that is, if they have started to think about retirement planning in the first place.
A 2011 study of small business owners found some sobering statistics about attitudes toward retirement planning:
- Two-thirds of the participants surveyed admitted to not having a written retirement plan.
- 40% of respondents did not plan to retire early because they would not have sufficient money to live on.
- 17% do not plan to retire at all.
- Of all the respondents, fewer than 50% consulted with a financial planner.
While most business owners do not know what will happen when they reach retirement age, they should have a plan to deal with issues such as health insurance and financial security. Spending a little time with a financial planner now can be an eye-opening experience. Your planner can help you identify a specific monetary target to reach by the time you are 65. Making this one critical decision now will affect how you run your business today and moving forward.
A good retirement planner will understand your assets — including your business — and help you determine financial goals based on how you want to live once you have left the workforce. These individuals are experts at understanding Social Security benefits, when they should be utilized, how much money you can expect from investments, and how to set up those investments for maximum tax savings.
One retirement plan option for business owners without employees is an Individual 401(K) plan. The I-401K account works the same as a traditional 401(K) plan and allows you to borrow money against the account. In addition, you can contribute large sums of money to the 401(K) as both the employer and employee.
Armed with a retirement plan, you can invest your hard-earned money wisely, giving you a better return when retirement age is upon you. Start planning for retirement today so you don’t put your business and personal future at risk.
This article was provided by Patriot Software, Inc., a developer of online software for U.S. small businesses, including online payroll software, applicant tracking software, human resources software, an employee portal, and 1099 software. Patriot Software also offers a payroll tax filing service for payroll customers, and is currently developing bookkeeping software and a website builder. For more information, visit www.PatriotSoftware.com.