Thursday, 08 February 2018 11:41

Who is Saving for Your Future?

By Peter Sweetser | Families Today

Many small businesses lack a retirement plan. This is startling, especially considering the fact that a retirement plan can help an entrepreneur achieve their long-term financial goals and attract and retain loyal employees. Running a small business can be difficult. As an entrepreneur, you have numerous issues to juggle and may find yourself forced into matters that are beyond your expertise. You are likely to be crunched for time and may even place some beneficial initiatives on the back burner. Unfortunately, some business owners, especially ones with a handful of employees, may not take advantage of the basic retirement plans that are available because of the misconception that they are complicated and time consuming. However, retirement investing can be easily understood and administered.

Ask yourself, “Who is saving for my future?” Just like many aspects of your operation, you have to be proactive and save for your retirement. Small business owners tend to pay themselves last, but I recommend that you get in the habit of treating your retirement contribution like a monthly bill and pay yourself first. 

Small business retirement plans can be a good way to save for those golden years. Firstly, contributions for both you and your employees can be a tax deduction for the business. Secondly, contributions can grow tax-deferred until you withdraw your money in the future. 

Two of the options available to small businesses that can be effective and easy to implement are the Simplified Employee Pension (SEP) IRA and Savings Incentive Match Plan for Employees (SIMPLE) IRA. They both offer low-cost, tax-advantaged retirement savings opportunities for self-employed individuals and small business owners. A SEP IRA often works well if you are the only employee of the business or if it is just you and your spouse. A SIMPLE IRA can be good for both business owners and their employees. Additionally, if you have a SEP or SIMPLE plan through your company, you may also invest in your own Traditional or Roth IRA to supplement your retirement savings.

A sound retirement plan can help make it easier for an entrepreneur to achieve their financial objectives. It can also help attract and retain loyal employees while offering them the potential opportunity to grow their savings tax-deferred and retire comfortably. As Ben Franklin said, “You may delay, but time will not.”

Peter Sweetser is with Fenimore Asset Management headquartered in Cobleskill, NY with a branch office in Albany.

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