Small business owners are often considered the lifeblood of America. In fact, a 2012 U.S. Census Bureau study
reported 28.4 million small businesses were operating in the U.S. and accounted for 48.4 percent of all U.S. employment
. Providing jobs, offering goods and services to their communities, stimulating local economies, and embedded in the communities in which they live – small business owners not only keep the economy running but they embody the American dream.
The importance of small businesses is clear, but the fact remains, owning your own business is hard. For the majority of Americans, work ends when they leave the office. On the contrary, small business owners are always on call, work is almost always at the top of their minds, and the decisions can’t be deferred to anyone else. The buck stops with them.
With so much time, energy, and effort required to run a small business, it comes as no surprise that a recent American Express survey of small business owners, referenced in a CBS News article
, found that 60 percent reported that they are not on track with their retirement savings. Additionally, 73 percent reported that they are worried about their ability to save for the lifestyle they want in retirement.
Even more worrisome, a recent survey conducted by CNBC and the Financial Planning Association
reported that those surveyed held a whopping 70 percent of their wealth
in their small business and 42 percent of the respondents cited retirement planning and an exit strategy as their most pressing concern.
So what are small business owners to do? Retirement investing takes time and money (especially money not tied to the business) – both rare commodities for many small business owners. Not to mention the majority of Americans rely on employer-sponsored retirement accounts such as 401(k)s, but what can be done when you are the employer who is supposed to be sponsoring the plan?
Retirement Saving Options for Business Owners
Fortunately there are retirement plans afforded by the federal government that allow business owners to save up to 10 times more for retirement than individuals and bolster the retirement saving potential for business owners. The SEP and SIMPLE IRA are two accounts available to small business owners, in addition to the Solo 401(k) for businesses in which you (and/or your spouse) are the sole owner(s).
These account options are available from custodians such as Equity Trust and are the perfect vehicle for a small business owner to use their pride and joy (their business!) to build the retirement they’ve dreamed of. It’s time for business owners to focus on themselves for a change.
Unfortunately it’s a situation that occurs far too frequently: people devote their lives to building a successful business only to find that decades of hard work left them very little to live on once they retire with the goal of enjoying the fruits of their labor.
May, as National Small Business Appreciation Month, is the perfect opportunity for business owners to take some time for themselves and make sure they’re devoting enough time to their retirement.
Free Education – Super-Sized IRAs: Inside the SIMPLE, SEP and Solo 401(k)
If you’re looking for ways to contribute more (and potentially have larger tax deductions) to your retirement account, there may be an answer. In this presentation Equity University dives into small-business retirement accounts, including the SEP and SIMPLE IRAs, and explains how they can potentially magnify your wealth building.
Think you don’t qualify for a small-business account? You might be surprised!
Having enough saved for retirement is a challenge that everyone is faced with, but for small business owners this challenge can seem even more difficult. Small businesses provide so much to the American economy and the local communities in which they are located, it’s time they are armed with the tools needed to retire comfortably and enjoy a job well done.