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Retirement is No Small Business

Sarah Brooks

February 20, 2015

Many Americans do not save for retirement, whether they are working for a company or working for themselves.

In fact, more than 9 million business owners have no retirement savings, according to the Small Business Administration.

With that in mind, what are you doing as a small business owner when it comes to putting funds away for your future?

Why it's Important to Save for Retirement

When the economy is struggling and you're living paycheck to paycheck, retirement savings are usually the first thing to go.

You need money now and assume that your future financial goals can wait. This way of thinking is what gets many Americans in trouble in their elderly years.

Instead of making excuses, Americans should prioritize paying themselves first by means of saving, investing and preparing for retirement.

Reasons small business owners should be saving for retirement include not knowing if they're business will still be successful years down the line, not wanting to burden their children by living with them, being able to travel and pursue non-work related hobbies and activities, being able to enjoy life without stressing about finances and not wanting to rely on government assistance.

Ways Small Business Owners Can Save for Retirement

As the following article looks at, how do you plan on funding your retirement income?

TD Ameritrade's Self-Employment and Retirement Survey found that most entrepreneurs (59 percent) plan on saving and investing while some plan on either selling their business or continuing to operate it.

The reality, though, is that 40 percent of those surveyed aren't saving any money at all.

If you're a small business owner, now is the time to start thinking about and saving money for retirement. The sooner you start saving, the more your money will grow thanks to compounding interest.

If you're not sure where to start, speak with a financial planner at your local bank or credit union. He or she can help guide you on the different types of retirement accounts and how you can go about setting one up.

Other ways to save for retirement include:

• Automate it - Once you get your retirement accounts set up, automate your contributions just as you would if you were working for someone else. You can choose to have a set amount transferred into your account once a month, once a week or however often you please.
• Pay yourself first - Instead of prioritizing bills and living expenses first, prioritize your future first. This is not to say you can pay your bills late or not at all, but it's simply a different way of thinking. Pay yourself (via savings and retirement), pay your bills and other living expenses then enjoy the rest.
• Think about the future of your business - Some small business owners hope to sell their business one day and use that income as their retirement income. While this sounds good, it's not going to work unless your business actually is able to be sold. Can it function without you? What type of buyer would be interested in the business? At what age do you plan on selling? How much are you hoping to sell it for? Start taking the necessary steps today in order to sell your business at your ideal time.

Unless you have a massive inheritance coming your way, now is the time to start saving for retirement, especially for entrepreneurs.

If you haven't prioritized this in the past, it's not too late.

Speak with a local financial advisor as soon as possible to get the ball rolling.

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