As a small business owner, you don’t have the programs that an employer would offer you in a benefits package. This means you’ll have to take a more active role in planning for your retirement. This guide provides a general overview, which you can use to develop a retirement planning strategy that will work for you.
Develop an Exit Strategy
An exit strategy is a plan that addresses all of the factors that will be involved in planning your retirement. This includes ensuring you’ll have enough savings to allow you to retire, while also developing a plan for the future of your business. Will you pass the business on to your children, sell it to a partner, or dissolve it altogether? Once you know what you’ll do with your business, you can start making arrangements to carry out your wishes when you are ready for retirement.
Start Saving Now
You can’t rely on the market value of your business to provide you with the savings you’ll need to retire. Starting as early as possible, you should be putting away at least 10% of your earnings and investing that capital in a retirement account. It may help to consult a financial advisor, since a professional can help you map out an investing strategy that will grow the wealth you’ll need. Above all, ensure you’re earning enough money to allow you to invest the maximum the IRS will let you invest in your IRA accounts.
Continue Growing Your Business
Investing in your business is also important, because it allows you to grow its success and increase its market value. This means producing more products, hiring more employees, and updating equipment as frequently as possible. While this requires a significant financial cost, it will be well worth it in the long run. Continuing to develop a successful business will help you increase its worth, which means you can sell it for a higher price upon your retirement.
Overall, you should minimize your spending, and only use credit to improve your business. Often, overspending causes business owners to put them in a bad situation as far as their ability to retire. Weighing the costs against the potential for growth will help you take good risks, so you’ll be in a better financial position. Even in bad times, adopting a strategy that employs these suggestions can help you keep your business profitable and your plan for retirement on track.
David A. Noyes and Co. is a DBA of Sanctuary Securities, Inc., Investment products and services are offered through Sanctuary Securities, Inc., Member FINRA and SIPC.