What will it take to retire?
You’ve poured a lot of yourself into making your business successful. Now, it’s time to think about getting some of that back. Have you started daydreaming about retirement? Are you afraid you can’t afford to retire?
Many financial professionals say that each of us will need at least 80 percent of our pre-retirement earnings to maintain our current standard of living during retirement. Where will that money come from?
You may be relying on a combination of Social Security, a qualified retirement plan such as a 401(k) plan and your business. However, Social Security and qualified retirement plans can actually discriminate against business owners by placing limits on contributions, payouts and tax advantages. This can result in a retirement income gap.
Your business holds the key
You’re in the unique position of owning a business, which can play a key role in your personal retirement. Depending on the value of your business, the strength of your buy-sell agreement and proper funding, your business can generate income during retirement, just like it has done through your working years. If rather than selling your business, you want to gift it to your family and continue working, that’s also possible. All it takes is some careful planning.
Whether you’ve already started planning, or have just begun to think about it, the place to begin on your road to retirement security is with these three questions:
1. Your retirement income goal
Consider your potential retirement income sources:
Many assume that the sale of their business will provide enough to keep them comfortable. But, some find out when it’s time to sell that the business isn’t worth enough to sustain their income needs. In order to know where you stand, you need to consider the potential sale price of your business.
Then, you can plan accordingly.
2. The value of your business
Without knowing the current value of your business, it’s difficult to know how much your business can contribute to your retirement income goal. Plus, not knowing the fair-market value can lead to roadblocks such as these:
3. A current transition plan
Have you identified to whom you want to transition your business? How about when and how you want that to take place? Once decided, it’s important to have that documented. If a sale is involved, a buy-sell agreement will help identify the buyer and help determine a purchase price. This is critical for not only retirement planning, but also for protecting you and your family in the event of your planned or unplanned exit from the business.
Do you have a plan?
So, how secure will you be during retirement? As we’ve outlined, knowing your business’s value and having a current transition plan are important first steps to figuring out how much you can rely on your business in retirement. You also need to consider how other savings and investments may effectively contribute to your income.
A detailed analysis can pull all of these factors together to help you evaluate your current plans and financial position. And, if needed, direct you to strategies that can help you, as a business owner, achieve retirement readiness.
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A SEP plan allows employers to contribute to traditional IRAs (SEP-IRAs) set up for employees.
A business of any size, even
self-employed, can establish a SEP.
What Makes National Life Group the right choice:
• Company ranked among the top life insurance companies in the United States.
• Longest standing issuer of indexed annuities.
• #1 provider of indexed annuities in employer plans, including 403(b) & 457(b).
• Company that offers retirement solutions with guarantees that provide income for a lifetime. Contact us today.
Business Owners Retirement
How ready are you for retirement?
Your business can play a key role.
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