In business, there are no small decisions, especially when it comes to your retirement. For best results, entrepreneurs should begin the process early. Start by defining clear goals and working with professionals to establish a comprehensive retirement plan. Doing so can provide great peace of mind.
Time passes and as it does, we get closer to retirement. While there’s no one “best way” to prepare, there are steps a businessperson can take to design their financial future. There is longevity risk as your retirement may last longer than planned. What about market risk i.e., the threat of significant investment loss? There’s the impact of taxes and inflation as well as health and long-term care expenses.
Retirement plans for business owners depend on company size and employee count. Solo 401(k)s are often a good choice for sole proprietors. SEP IRAs or SIMPLE IRAs are designed for those with employees and provide an easy, low-cost option for small teams.
Equally crucial steps include the importance of objectively evaluating the value of your business versus what you want or need. This is known as the “value gap.” On the personal side, you should also consider such factors as how you wish to live in retirement. What is your health status and that of your spouse? How do you plan to spend your time?
Trying to engineer an exit due to unexpected factors—death, disability or sudden loss—can be a living nightmare. Be proactive. Organize legal documents. Have financial statements/projections updated. Take inventory of intellectual property and hard assets. A truly professional team can help you obtain high-quality tax, legal, insurance and financial guidance as well as identify and assess such risks as market volatility, economic downturns and negative changes in government and/or tax policy while creating an all-weather, retirement-income stream. A permanent life insurance policy can provide a low-risk, permanent income plus a death benefit. Long-term care coverage can manage elder-care costs. An estate plan will make sure your final wishes are honored.
Doing nothing has no price but it can come with a cost. It’s not necessarily those with the most money who live the most fulfilling retirement. It is however, often those who plan who get the most from retirement. You’ve likely spent a lot of time and effort running your business, with some common-sense planning, your retirement can be equally fulfilling. We can help you.
The Retirement 7
- Start a Plan: Discuss plans with your spouse, close family members, business partner(s) and key employees.
- Build Your Team: Professionals can help you get the most from your retirement.
- Adjust expenditures: Consider home downsizing, reduce leisure travel, drive a more efficient car.
- Increase Savings: When within 15 years of retirement, annually contribute a minimum of 15% of earnings toward retirement.
- Know Your Social Security Choices: Postponing benefits until age 70 can boost income.
- Be Diversified: Use equities, bonds and cash to provide capital growth and an income stream while minimizing volatility.
- Reduce/Eliminate Debt: Debt destroys wealth. Successful retirees keep debt manageable.
Rocco A. Carriero, MBA, CRPC®, APMA®
Private Wealth Advisor
President & CEO
Rocco A. Carriero Wealth Partners
A private wealth advisory practice of Ameriprise Financial Services, LLC
Rocco A. Carriero is the author of: Three Cords Approach to Life and Wealth Management for Business Owners. For a complimentary copy, please contact our office: 631-283-8482.