According to a 2019 study by SCORE, 34% of small business owners do not have a retirement savings plan. 40% are unsure of their ability to afford retirement after the age of 65.
Working with a financial services firm that provides forward thinking advice, not just historical review, can help you manage your assets to both grow your company now and plan for retirement.
Below are a few tips to get you started.
Start a Retirement Account
It is never too late to invest in your retirement. Business owners have several options depending upon income. Examples include:
IRA (Individual Retirement Arrangement)
Individual or Solo 401K
Take Stock of Your Expenses
This includes expenses you may incur after retiring as well as overhead costs for personal and business such as car, rent, and meals. As a business owner[USC1] , it can be easy to forget how much is being deducted directly out of the business. You may be able to alleviate a lot of unnecessary costs by taking an honest look at what is crucial. Eliminating these extra costs will help you slow your spending and manage cash flow. Manage your wealth by focusing on savings and spending less.
Know Your Net Worth
Taking stock of your current net worth, including the value of your business, will help you gauge how much you need to grow your wealth in order to retire. You can use the following online tool to get a rough estimate of your net worth.
For true calculations of both personal net worth and business value, it is best to enlist a professional financial services firm.
Plan Your Exit
You may imagine yourself working forever, but 2020 has shown us that unexpected events can, and likely will, occur. Putting a solid succession plan in place is crucial for ensuring you can realize the full benefits of your years of hard work.
“For many business owners, the biggest asset on their balance sheet is their business. Often, those same business owners have no formal succession plan. In order for a business owner to effectively manage personal wealth, I believe they should prioritize implementing a succession plan. Too often, people place an emphasis on investments when a bigger impact can be made with proper planning.” – Josh Fein, AdvicePeriod (Forbes)
Managing your wealth and planning for retirement can be challenging for busy business owners.
Fates, Bodily and Parker can provide the tools, knowledge and advice you need to grow what you have while planning for the future.