Four Ways Business Owners Can Prepare For Retirement

It's never too soon (or too late) to start planning for retirement. Here are four options every business owner can consider.

Employees tend to do a good job when it comes to thinking about retirement. With little desire to work longer than necessary, they keep an eye on the future. They look for ways to start saving and investing so they can retire at a reasonable age. If they can achieve this and secure a retirement lifestyle in the process, their careers have been successful.

Unfortunately, many business owners don’t spend as much time planning their financial future. Instead, they focus on the here and now to keep moving the business forward. However, today is the right time for small business owners to start thinking about the future. It’s never too soon (or too late) to start investing for retirement. Keep in mind, there are a lot of investing options like buying cryptocurrencies, stocks, real estate, and precious metals being just a few of them.

If you are a small business owner looking for investment and retirement ideas, here are four to consider.


1. Solo 401(k) for the self-employed

Simply put, a Solo 401(k) is a retirement account designed for the self-employed, or business owners with no full-time employees. If your company operates with both you and your spouse, for example, you may be eligible for a Solo 401(k).

A solo 401(k), or what the IRS calls a one-participant 401(k), could save you a statutory amount tax-deferred, plus save an additional 25% of self-employment net income. Based on 2019 IRS guidelines, that amount is capped at $56,000 up to $61,000 for the year if you are over 50 years of age. As long as you have an employer identification number (EIN), you can open a Solo 401(k) at many online brokers.


2. Inclusive retirement plans for employees and owners

While you are contemplating setting up a retirement plan for yourself, you can also benefit by addressing the needs of your employees.

In a competitive industry and tight talent market, employees will prioritize employment opportunities that come with benefits. As your business grows, it’s a good idea to create a benefits package that includes a 401(k) plan for employees. Not only will this help attract top talent, but as the owner, you could participate as an employee and take advantage of tax write-offs for matching contributions on behalf of your employees. If your business has fewer than 100 employees, offering access to a Simple IRA may suffice.


3. Business growth

It’s possible you just don’t feel you have enough time to worry about investing right now. However, you can use growth strategies to increase your future wealth. If you have been reluctant to give your business room to grow, it’s a good time to rethink your strategy. A larger business means more profit, which will eventually translate to more income and wealth opportunities down the road.


4. Selling a business

A great way to invest in the future is by selling a successful business to the right people at the right time. As you focus on strategic growth, you may build an entity with lasting value. Unless you plan on working well beyond retirement age (or you have a succession plan in place), selling your business could be lucrative. Now is the time to start developing key relationships with business brokers in your industry, and learn about your local investment community. While you won’t sell the business anytime soon, you’ll have access to the relationships and resources you’ll need in the future.


Megan Wright is the Chief Editor for ChamberofCommerce.com. As a small business expert, Megan specializes in reporting the latest business news, helpful tips, and reliable resources, as well as providing small business advice.


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