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Many Business Owners are Behind the Retirement Savings Curve

Small Business Finances �Rich Best
Rich BestRich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.

Many Business Owners are Behind the Retirement Savings Curve

Many Business Owners are Behind the Retirement Savings Curve

Today’s business owners face a whole new set of financial challenges never imagined by previous generations such that an increasing number aren’t even contemplating retirement or, at the very least, looking at it as a moving target. With all of their attention and much of their money focused on their business for so many years, many business owners are behind the retirement savings curve. At least on paper, the path to their future financial security is steep, and, as their retirement time horizon gets closer, the cost of retirement will increase.

Does that mean I should give up on saving for retirement?

The answer is a resounding NO! Even if you plan to continue working, you have to consider the possibility – make that the likelihood – that your earning capacity could be limited due to health reasons. You will most likely need to rely on your resources to enjoy a quality of life. And, the reality is that even if you are in your 40s or 50s, there are still several strategies you can employ to get you on track to build an adequate nest egg.

Save more: Okay, more easily said than done for some business owners. But, if you genuinely have a retirement mindset, why not adjust your lifestyle right now instead of waiting until later. More people are choosing to downsize in their 40s and 50s so they can increase their savings, but also as a way to create a smoother transition into a retirement lifestyle. Downsizing your living space, your cars, your leisure activities, your fashions, and food brands can free up thousands of dollars a year that can be poured into your retirement plans.

Max out your retirement plans: With that additional cash flow, you should be maxing out your retirement plan contributions. If you’re over the age of 50, you are allowed to boost your contributions with catch-up contributions. The additional tax savings from your deductible contributions can also be put to work in a non-qualified investment account.

Don’t go soft on your investments: Many business owners aren’t reaching their retirement goals simply because they aren’t generating enough returns on their investments. Don’t let the markets spook you. Investing wisely using a diversification strategy that balances all of the various risks will keep your portfolio stable and always heading skyward. Load up on dividend-paying stocks or funds that invest in them. They have consistently outperformed the rest of the stock market, and they pay a dividend yield much more attractive than bonds or CDs.

Plan Your Business Exit Strategy Now: If you plan on selling your business or transitioning it to a successor, you need to plan your exit strategy well in advance. If you’re going to sell your business, focus your efforts on making it sellable by boosting its value. If you are going to transition the business to a successor, you should have agreements in place to facilitate the transfer and the financial arrangements.

Above all, stop procrastinating. There’s no bigger dream killer. Your most valuable asset is time. It’s also a wasting asset if you don’t put it to work for you. Each day you wait to take action, the cost of your retirement increases.

Set your sights, map out your plan, and take action today.


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