Retirement Strategies for Small Business Owners Planning Early Exit

If you're approaching retirement or considering an early exit from your business, securing your financial future is essential. Starting your retirement planning early provides more options to tailor your investments to your needs. Begin by evaluating your income sources and estimating your post-retirement finances. Then, develop a comprehensive long-term financial plan. You might explore new hobbies like traveling or participating in events, which can be costly. Additionally, consider relocating to a retirement community or accounting for potential medical expenses.

Ensuring a consistent income stream is vital for sustained living.

Patience and thorough research are key when choosing retirement investments. Understanding your options can help you maximize savings and minimize taxes. As a small business owner, you're likely accustomed to multitasking and independent decision-making, which can be challenging. Comparing various retirement plans is recommended to find the best fit for your situation.

Remember, these investments are often your primary retirement funds, with limited fallback options.

If you have no employees besides your spouse, establishing a solo 401(k) plan could be advantageous for increasing your contributions. This plan allows for higher contribution limits, helping you save more for retirement. Keep in mind that total contributions, including employer and employee contributions, cannot exceed $54,000 (for 2017).

The Simplified Employee Pension (SEP) IRA is another excellent choice for sole proprietors seeking easy setup and minimal administrative hassle. Unlike a solo 401(k), it can also include employees, providing room for business growth. Choosing the right plan depends on your business structure and retirement goals.