Retirement Saving Strategies for Business Owners

Why business owners need to think about retirement savings differently.

A young small business owner florist working in a retail garden center store.
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[See: 12 Surprising Facts About Boomer Retirement]

Take a cue from professional practices, which long have used a gradual buyout model to transition from one partner to another, Demmissie advises. Anything that requires your clients to have trust in your services can be handed over to a successor, given enough lead time and planning, she says.

Build a rainy-day fund of at least six months' savings so you aren't forced to borrow against your retirement savings, doubling your future burden to both repay what you borrowed and catch up on missed payments, she explains.

Demmissie recommends examining the retirement savings options currently available to you, including individual retirement accounts and personal 401(k) accounts. See the Financial Planning Association's recommendations for business owners' retirement planning. Once you've found a good option, "Just go ahead and open the account," she says. "Have a goal of putting a certain amount per month into it. Even if it's daunting, at least get going." Although Demmissie doesn't suggest a minimum percentage to put into your 401(k) because it is too specific to each individual, she suggests using an online calculator to determine the number that is right for you.

Capturing immediate tax savings can reconcile the apparent conflict between your business and your future economic independence, Maes says. With an individual 401(k) or defined-benefit plan, you can start saving in a way that minimizes the impact on cash flow and ensures that your company supports your economic independence now and after you've retired.