When Can You Afford to Retire as a Small Business Owner?

retiring as a small business owner

One thing that many small business owners don’t think about is retirement. There are two reasons for this. First, many owners think they will never retire because what else would they do? Secondly, before they retire, they will have sold their company for a “boat load of money” and won’t have had the need to save for retirement. Unfortunately, statistics show that only about 30% of all small businesses that are put up for sale actually end up selling.

On The Small Business Radio Show this week, I discuss solutions to this important problem with Anne Lester who is a retirement expert, highly sought-after speaker, and media commentator with over two decades of experience in all aspects of retirement. She spent 29 years as a portfolio manager and Head of Retirement Solutions for JPMorgan Asset Management’s Solutions group, holding patents for her progressive design to simplify and automate the retirement planning process. She is now on a mission to help Americans understand that it is possible to achieve a “happy retirement, on their time and target”.

Anne discusses first why unlike other countries, Americans don’t save more for retirement. She insists that “the public policy about retirement are really tax code accommodations and not really retirement planning benefits. It makes it harder for individuals to save. In America, you only get the benefits that you have earned.” Anne discusses how anyone can become financially ready to retire, regardless of where they are in their career.

But it’s a lot harder for people that don’t get a paycheck since a company that pays an employee does some of the heavy lifting; Anne says that “they set up the retirement savings plan and sometimes match your contributions. As a small business owner, you need to put an expense line item on your company’s budget for 15% of your gross income for retirement. Set this automated system up for yourself so you don’t have to make that decision monthly.”

Anne discusses her 3-step framework to help you save:

  • Step 1:  Automate a savings plan. The wiring in our brains emphasizes satisfying the present over the future. If you leave it up to your “present brain”, you will save less.
  • Step 2: Pay yourself more as your compensation goes up. Build savings increases slowly over many years.
  • Step 3: Have your retirement money managed by someone else using mutual funds. This prevents the fear/ greed conflict of buying high and selling when stocks are low.

Listen to the entire interview on The Small Business Radio Show.

Image: annelester

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Small Business Radio Show As a small business expert, Barry Moltz gets owners growing again by unlocking their long forgotten potential. With decades of entrepreneurial experience in his own business ventures as well as consulting countless other entrepreneurs, Barry has discovered the formula to get stuck business owners unstuck and marching forward. As a small business expert, Barry applies simple, strategic steps to facilitate change.