Retirement Planning And Building Business Assets
A recent survey conducted by Harris Interactive for ShareBuilder found that 47% of small business owners were not confident that they are adequately prepared for their retirement. Part of successful retirement planning includes your own retirement needs, but as a responsible business owner you’ll need to consider the fate of your hard-working employees after you leave as well. Building business success with a retirement plan is a logical step.
Social security and pension plans should be the baseboard for your retirement planning, but you’ll have to think more creatively to continue making money once you’ve left your business. Many owners, while simultaneously building business, choose real estate investment properties or further their stock and mutual fund investments. In addition to expanding your business, you should be retirement planning and considering an exit or succession strategy. Recruiting the services of a financial planner can be an invaluable asset.
For many retirees, 31% of their business retirement plan will come from the sale of their business. An additional 28% will come from a registered government savings plan, such as an IRA or 401k, and 25% from stock market investments. The smallest income will be the 16% from social security or pension funds.
Should you offer employee retirement planning? While building business, it’s a good idea to share some of the company profits with hard-working employees. Generally a company with an employee retirement plan will have better productivity, stock purchases, employee retention and a more secure future. For starters, you may want to consider a Simplified Employer Pension IRA. You will make contributions to a general fund, using up to 15% of employee income, in the employee’s name which they will receive when they retire or decide to dip into the fund. You can decide what percentage of the company’s profits you’ll distribute among employees and you’ll enjoy easy administration, no additional IRS reporting, tax kickbacks and a better rapport with your employees. One in five small businesses now offers an employee retirement plan, so don’t hesitate to look into a SEP-IRA or 401k plan when building business.
As a business owner, you understand the importance of building business for the future. Part of that strategy must involve a business retirement plan for you and your employees. By talking with a retirement planning service like Fidelity Financial, you’ll take the first step toward a secure future.
Published by The Money Manager
