It is amazing to me, as a financial advisor, that so many small businesses don’t take advantage of setting up a small business retirement plan. In fact, a labor department study said that less then 50% of companies with fewer then 99 employees offer a retirement plan. This is amazing to me because plans for these groups have improved quite a bit recently.
I’ll Just Sell My Business
One of the biggest things I have heard from small business owners is that their business is their retirement plan. That they don’t need a retirement account because they will just sell their business when they need to retire. Sorry to say, but that is extremely risky thinking.
What happens if the value of your business decreases when there comes along a new competitor, a new product, a new technology or even a downturn in the economy? Even two to three years of mediocre years can sink the value of your business. Think about this one last thing. Would you ever place the value of any retirement account into one stock? That is essentially what you are doing when you make your business the only source for your retirement.
I Can’t Afford a Plan
One of the other things that I hear is that small business owners can’t afford a plan. While that may have been true in the past, congress has passed legislation that is a lot friendlier to small businesses. There are plans out there that can cost the business absolutely no money. There are even some plans that you can offer to your employees that require no contribution from employers at all. Small business retirement plans have become a lot more affordable, flexible, and simple.
WIIFM (What’s in it for me)
So what’s in it for you? Besides the obvious that is allows for you to save for retirement? What about the potential for gains through tax advantage investing? What about diversification through many investment options? These are just a few advantages for you.
WIIFMB (What’s in it for my business)
What’s in it for your business? Anything that you put into the retirement plan is a tax-deductible expense. Also it helps with employee retention by adding a low cost, major incentive to your benefit package. When someone is deciding between you as an employer and another employer, this could be the deciding factor.
I Already Have a Plan
If you already have a retirement plan established, it might be a good time to have it looked at again. Like I mentioned earlier, Congress has taken steps to improve plan offerings. Your plan may be out of date with the time. Also your investment options may be lacking. Your fees may be too high. Your service from you provider may also be lacking. All of which could add to an increase of liability for you as a business owner.
The offerings for retirement plans are numerous and they are misunderstood. Yet they are also one of the benefits that are most overlooked. I would be happy to meet with anyone who would like to at least explore his or her options. If there is not a good fit for your business, at least you will know that for a surety.