Small Business Owners Need Retirement Plans

Do you own a small business? If so, then you already know, all too well, how challenging it can be to run your business and look out for yourself too. One important way that you should be “looking out” for yourself, if you’re not doing so already, is by taking some of your money and putting it into a retirement plan.If you’re not doing that, then you’re missing out in some major ways.  

Missed Tax Benefits

One of the big ways in which you miss out if you don’t have a retirement plan is by not getting the resultant tax benefits. Most plans open to business-owners, such as 401(k) plans designed specifically for them, come with a great many tax benefits…benefits you don’t get if you don’t sign up for a retirement plan. Such benefits include, in many cases, tax-deductible contributions to your retirement plan, which is basically like free money, and who would turn that down?

Missed Savings and Emergency Cash

Another problem with not having some kind of retirement plan in place is that this can make it much harder to save money for the future. And, when you don’t have money saved and retirement rolls around, what are you going to do? You don’t want to be one of those people scrambling to make ends meet in retirement and never truly enjoying what should be this golden time in your life.

Furthermore, many retirement accounts, including 401(k) plans, give you the option to borrow from your account if you need to, such as in an emergency situation. It’s nice to have that built-in safety net, a safety net you don’t have without a retirement plan, in case you or your business fall on hard times.

As you can see, you miss out on all kinds of things- and these are just a few- when you don’t save for the future. So, make sure you have a retirement plan and that you make full use of it to get and enjoy these awesome benefits.

Related articles

• Business owners need extra planning for retirement (usatoday.com)

The Truth About the Retirement Crisis

Many people believe that America is in a “retirement crisis.” They feel that, with so many baby boomers reaching retirement age and so few of them actually read for retirement, we’re in for trouble.

 

Of course, not everyone agrees with this fear. Take liberal Kevin Drum, for example. The researcher and financial guru says that there’s no evidence for a retirement crisis. In fact, he even went so far as to suggest that, thanks to the use of 401(k) accounts and other retirement accounts instead of traditional pensions, people who are soon to retire will fare better, financially speaking, than usual.

Despite the claims of Drum and the many who agreed with his logic, the facts just don’t fall in his favor. Research shows that, while effective in some ways, 401(k) plans and individual retirement accounts aren’t as beneficial as traditional pensions, and sadly, these non-pension plans are what a lot of soon-to-be-retirees are banking on.

Another problem is that for most of the 65 and over crowd, a huge part of their income comes from working, so when you take working out of the equation in retirement, these people are often faced with a drastically reduced standard of living during retirement.

Other concerns for retirees include the following:

- Recent cuts to social security income allotments

-  Low interest rates, which equals low investment returns

- A decrease in the availability of defined-benefit pensions

-  Longer lifespans, meaning a need for more funding during retirement

It’s easy to see that there are some serious concerns about retirement and what it will be like for the generations to come. Right now, people just have to plan as carefully as they possibly can and save as much as they can. While many hope that, one day, there will be more and better plans in place to provide for retirees, without them having to do all the work of scrimping and saving, that hasn’t quite happened yet, so the responsibility, fair or not, does fall on the individual.