With the present income situation in the US, small business owners find it indeed troubling to save for their retirement. As per a recent survey of 500 small business owners, only a small fraction of the entrepreneurs in America are well-prepared for their retirement. The survey revealed that 75% of the respondents who were in between the age of 18 and 64 saved even less than $100,000 keeping their golden years in mind. On the other hand, those who were between 45 and 64 were moderately prepared, 34% have a little more than $100,000 in retirement accounts and 12% have more than $500,000.
It is indeed pleasing to see that 34% of the business owners in between the age of 45 and 64 were almost close to their retirement with enough savings in their bank accounts. But what is the reason behind all small business owners not saving for their retirement?
Ramp up your retirement savings – Few tips
If you’re a small business owner who is trying his best to rack up savings in your retirement account, here are few steps to take.
- Calculate the numbers right
There are few questions that you should ask yourself like how much you would need to live happily during your retired years when your business is no longer helping you meet ends. Unless you get a clear idea of the living costs, you may not know how much exactly you would require for your retirement. So, first get your numbers right.
- Hire a personal financial advisor to kickstart your retirement plan
There will arise a situation when you have to hire a CFP or a Certified Financial Planner who can help you with taking the best financial decisions. You can search for CFPs in the National Association of Personal Financial Advisors, the Financial Planning Association, the Garrett Planning Network and some such institutions.
- Make sure your retirement plan is diversified
No, you wouldn’t want to throw a large part of your income to the retirement plan but your funds will let your tax bill and grow tax-deferred till you make withdrawals in retirement. The cost of administering a plan in place is rather small and you can seek help of 401(k) planners who will tell you how to diversify your retirement plan.
- Watch out for 401(k) plans that are meant for small businesses
There are few 401(k) providers which target only small businesses these days. They offer low-cost, ETF 401(k) plans for businesses with less than 100 employees. You can get easy access to retirement planning experts as well.
As per a recent research by Capital One, more than 65% of small business owners think that they don’t have enough labour to offer them a retirement plan. This is one of the most prevalent misconceptions among the small business owners. The actual fact is that it doesn’t depend on the size of the business and even a single owner business can have a worthy 401(k) plan in place.