National Brokers Network

How to Save Up for Retirement for Busy Business Owners

As a business owner, you are the one who manages everything. From finances to managing your employees, you are seen as the leader of the pack. So when it comes to retirement funds, business owners can only rely on themselves to secure their future.

Unfortunately, REST Industry Super, a superannuation fund in Australia, revealed alarming data regarding small and medium enterprise (SME) owners’ financial and contingency planning. According to their survey called Bridge the Gap, one in five respondents admitted to not being able to support their own livelihood and living expenses for more than a week in of unplanned absence. On the other hand, there are only 32% of SME owners only think superannuation is essential during retirement.

In spite of regular payments for employees, Business Software & Solutions, MYOB Australia, revealed that more than one-third of the country’s 2.1 million small business owners are not allocating money to their own superannuation. MYOB CEO Tim Reed even said: “Our research shows that SMEs believe they will need around $1 million to retire comfortably yet 54 per cent of them will not have saved enough when the time comes.”

With the focus of business owners glued to make the business survive, along with the employees, and making it grow, the necessary fund allocations responsible for their retirement, benefits, and long-term financial planning are often pushed aside. So, how will business owners able to make it possible to contribute to making their retirement the way they want it to? Here are ways how:


Automatically Allocate Contributions

As a business owner, you have all your focus on your business. You’re coming up with new solutions and innovations for your business, customers, and employees as well. You have to wear many hats too many hats, making it easy to forget about responsibilities that will only benefit you, such as retirement planning.


It’s definitely difficult to add another task on your to-do list, but it’s a must; it’s for your own good. A suggestion is to automatically deposit to an IRA or 401(k). Or you can take 10 to 15% of your income and create an emergency fund in case of unexpected events that need money.


Start a 401(k)

The 401k Retirement Plan is an employer-sponsored retirement plan allows employees to have a part of their salary allocated to into savings and investments before taxes are taken out. Taxes will get paid when the money is withdrawn from the plan.


There are difficult determiners in this plan, such as Depending on your age, earnings and how employer contributions are made. There are some who were able to receive up to $61,000 in tax-deferred investments. There are a lot of 401(k) plan providers, and as a business owner, you should properly do your research finding the right one.


Stay Away from the Idea of the Future Value of the Business

There are a lot of small business owners who believe that their businesses will be able to fund their retirement. Their belief is that the current or future value of the business is enough to sustain them, expecting it will grow or sell more than expected. To back this up, Spark 401k Small Business Retirement Planning Index said there are 52% of owners that have $500,000 or more in revenue are planning to sell their business in order to have money during retirement.

This could be viable to some, but it comes with a number of risks, such as the timing of the sale — the sale could not make it to your asking price. Yes, there are factors that determine market value, but it’s still complex enough to understand on what will happen next.


How to Make it Work

For business owners, getting help from financial advisors can help on which retirement plan because different solutions can be discussed. On the other hand, if you’ve decided on selling your business, have a chat a chat with Melbourne business brokers in order to come up with a concrete plan on how to gather leads and get the sale price you’re aiming for.

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