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Published on: 03/23/2023

How to Save For Retirement as a Small Business Owner

As a founder and entrepreneur, saving for retirement is an important step in ensuring your financial security for years to come. With the right planning and guidance, you can pursue a retirement plan that plans for your needs and aims to provide financial stability during your golden years. However, knowing how to save for retirement as a small business owner can be challenging. 

Unlike employees of large corporations, small business owners typically don’t have access to the same retirement plans and benefits. Fortunately, there are numerous options available for small business owners who want to start saving for retirement, including Roth IRAs, SEP IRAs, SIMPLE IRAs, and solo 401(k)s.

In this article, we will discuss how to save for retirement as a small business owner, including tips on choosing the right type of plan for you and the best retirement planning strategies to provide long-term security throughout your retirement.

How do business owners save for retirement?

Business owners can save for retirement in a variety of ways, but the most common methods are IRAs for small business owners and 401(k)s. With IRAs and 401(k)s, the important thing is to start early and contribute as much as you can. With the right plan, a small business owner can create a retirement nest egg that will provide financial stability for years to come. 

1. Start as soon as you can

Early retirement planning is important because it allows you to take advantage of compounding interest, which will result in greater returns over time. Additionally, starting early gives you more time to save and reach your financial goals. It also means that if anything changes in your life or business, there is plenty of time for adjustments to be made so that you can still pass the time without worrying about your finances.

2. Invest wisely

Investing wisely is important for retirement because it ensures that your retirement savings are invested in assets that will yield the best possible returns over time, providing you with a secure source of income and financial stability during your post-career years. As a small business owner, you can choose to invest in stocks, bonds, mutual funds, or other investment vehicles depending on what best compliments your overall risk tolerance. 

Continue reading: Where is the safest place to put your retirement money?

3. Contribute regularly

Contributing regularly to a retirement plan is important for retirement because it allows you to build up savings that can provide a source of income and financial stability during your post-career years. Small business owners should aim to contribute regularly and as much as they are legally allowed to ensure that their retirement savings are growing over time, providing a reliable source of retirement income.

4. Take advantage of tax breaks

Small business owners can also take advantage of tax breaks and other incentives to save for retirement. For example, contributing to an employer-sponsored retirement plan such as a 401(k) or SEP IRA for small business owners may offer you certain tax deductions that can help lower your taxable income in the current tax year. 

5. Hire a wealth manager

Hiring a wealth manager is vital for retirement planning, as they can provide expert guidance on the best ways to save and invest for retirement, helping business owners make informed decisions about their financial future. They are also able to help you create a retirement plan that takes the other areas of your wealth into consideration, such as estate planning and risk management. 

What is the best retirement plan for a small business owner?

When it comes to choosing the best retirement plan for small business owners, there are a few important factors to consider. The best plan for you will depend on various factors, such as the type of business, its size, and your individual financial goals.

Before committing to a retirement plan, take the following questions into consideration.

  1. How much can you afford to contribute on a monthly basis?
  2. Which type of retirement plan will be most beneficial to your specific situation?
  3. Do the rules and regulations of each plan align with your goals?
  4. How much do you need to save for retirement?
  5. How much risk are you willing to take on?
  6. How long do you plan on staying in business?
  7. Are there any tax benefits or incentives associated with the plan that could make it more attractive to you?

These questions can help guide your decision-making process and make choosing the best retirement plan easier. If you need help deciding on the best small business owner retirement strategies for you and your ambitions, it is always a good idea to consult with an experienced financial planner who can provide custom advice tailored to your individual needs.

Small business retirement planning with Avidian Wealth Solutions

Whether you’re just starting out or have been running your own business for some time now, it’s never too late — or too early — to start planning for retirement. However, knowing where to start and how to choose the strategies best suited for you can be complicated. At Avidian Wealth Solutions, we make it easy.

We are a fiduciary wealth management firm with locations in Houston and Austin, Texas that offers financial planning for business owners and executives. Our advisors can sit down with you to discuss how to save for retirement as a small business owner and create a comprehensive plan that takes your current financial situation and long-term goals into consideration.

Schedule a conversation with us today to learn more about how we help founders and entrepreneurs with their retirement planning. 

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