Running a small business successfully and scaling up are challenges that everyone cannot tackle. The small business owner takes a huge risk in leaving a secured job with pension benefits. Hiring new employees, making business development plans and engaging potential customers take up all their time.
As a result, often small business owners get late in planning their retirement investments. Every small business owner has to plan ahead of time and start investing on different low risk plans so that they have sufficient money to retire on time. In the following, some easy guidelines regarding retirement planning for small business owners have been discussed.
Don’t put retirement off indefinitely
If you have been putting off retirement investments with the excuse that you need to earn more money first then you are making a mistake. You have to make methodic investments that will increase in proportion with the expansion of your business. You probably already have a business scale up plan. Now you will also have to draw up a similar scale up plan for your retirement plan. You can play safe in the beginning and make small investments. Gradually your risk taking ability will increase.
Calculate retirement income and count sources
Have you thought about the sources of retirement income yet? Some small business owners stay relaxed thinking that they will earn sufficient money from their business by the time they retire. No one has seen the future and things may make a wrong turn. Calculate the sum of money that you will need every month for sustaining your lifestyle after retirement. This will give you a clear idea regarding the money that you need to save. While planning take into account that the value of money will decrease in the future and costs will increase. Think in terms of the future and not the present circumstances.
Though fixed deposits in the bank do not help your money grow dramatically, but it is still a safe option. Apart from the equity in your small business, you should also consider investing in Registered Retirement Savings Plan. This will let you get the benefits of personal tax deductions. RRSP also lets you save without tax deterring. Another safe way of making investments is to find out suitable Tax Free Savings Accounts. You should also build a team of experts who can guide you in matters of investments. Talk to a financial advisor and discuss all your hopes and plans for retirement.
Get a tax consultant and lawyer on board for making a neat retirement plan. Another great tool for boosting your retirement investments is the pre-authorized contribution plan. It will transfer fixed sums from your current account to the savings plans regularly.
Be ready for the unforeseen
You cannot predict problems accurately but you can surely be ready for countering them. In ten years, your business can either shrink or grow to reach the next level of success. If the former happens, your income will shrink instead of increasing. Take into account disability, accidents and illness. Invest in health and life insurance plans for safety. You will also have to be cautious about tax deductions.
Take stock often
You should re-evaluate your retirement plans and investments regularly because it will help you keep a tab on savings. Circumstances will keep on changing and you may get an opportunity to save more or invest on profitable shares. Take calculated risks that will not harm your original plans.
Small business owners should plan their retirement ahead of time. Make careful and safe investments combined with non-registered investments to save enough money for your retirement.