By : HOWARD HILL
Source : http://thetandd.com
Category : Small Business Grant
Small-business owners have no corporate pensions, defined retirement options and few solid plans for retirement years. At some point, everyone must retire, unless an early death intervenes.
The non-profit The American College survey revealed, “About a third of small-business owners do not have a personal or business-sponsored retirement plan such as a 401(k), a SEP IRA or a deferred annuity. Nearly the same number has not estimated how much money will be needed in retirement.” Ouch!
Small-business owners are responsible for their retirement planning. But some will defer making decisions with this aspect of business life ... and possibly to their detriment. Small-business owners must make preparation for unpredictable aspects of life, fund desired retirement lifestyles, and engage in winning tax strategies.
Sarah Bernhardt (1844-1923) says, “Life begets life. Energy creates energy. It is by spending oneself that one becomes rich.” With retirement planning, small-business owners are afforded wealth beyond ordinary means. But they must spend themselves richly to get there.
American writer E. B. White chimes in, “The only sense that is common in the long run is the sense of change — and we all instinctively avoid it.” Retirement planning requires a change of attitude and a pace to reach destinations that planing dictates and mandates.
USA Today writer Laura Petricca provides her takes on why small-business owners do not have retirement plans: (a) surviving takes place over saving; (b ) they live in the moment; (c) setting up a company saving account appears daunting; (d) they don’t consider retirement; and (e) they think the business will provide for retirement security. These are excuses.
Here are seven retirement planning options for small-business owners to consider:
1. Health and life insurance, disability coverage. These are necessary products for peace of mind. They particularly provide protection for small-business owners.
2. Reverse mortgage. Pay off the mortgage within 10-15 years. Equity in the home then becomes money that can, based on federal guidelines, be tapped ... without a repayment.
3. 401(k), deferred annuities, mutual funds, stocks and bonds. The financial instruments could be in retirement and in estate plans. Carefully select a financial consultant for advice.
4. Ditto for deferred income, rentals, etc.
5. Liquidity. A year’s worth of cash reserves should be handy for personal or business-related emergencies.
6. Social Security. At age 62, or at the full retirement age, Social Security can cover some people’s monthly expenses (those without heavy debt).
7. Sell or lease the business. If the business is profitable and it is in a desirable location, it can be sold or leased profitably.
Retirement planning is necessary, and small-business owners must seek it. Paired with expert planning advice, the process could provide them with retirement cushions aplenty.
Reach T&D columnist Howard Hill, Ph.D., via Educationconsultant@sc.rr.com.
Source : http://thetandd.com/business/small-business-owners-and-retirement/article_1b476cbe-6a43-11e1-aa99-0019bb2963f4.html
