How to Plan for Retirement as a Small Business Owner, Part 1

How to Plan for Retirement as a Small Business Owner, Part 1

Small business owners are busy people. They are so busy, in fact, running the day-to-day operations of their business and taking care of their employees and customers that they don’t realize the passage of time. Nor do they make the time to plan for their personal retirement outside of the business.

Anchor Wealth Management is a financial planning firm with an office in Lanark and in Rockford. Our financial advisors work extremely hard to help our clients form a comprehensive financial plan that will ensure they don’t outlive their money. We do this by examining your goals and your finances and putting together an action plan to help ensure you don’t outlive your money. Our job is to keep you accountable to your financial plan so that you can live the lifestyle you want to in retirement. Below, we’ll take a look at some ways you can plan for retirement as a small business owner. Call our financial advisors at Anchor Wealth Management to get started today!


Plan for Retirement

This tip should be intuitive, but many people simply don’t plan for retirement, especially small business owners. Instead, they count their business as their retirement plan. They either plan to sell it when they are ready to retire, or they plan to pass it on and be paid for their share in it. The problem here is that if the business fails or it takes you a while to sell your business, you could be stuck between a rock and a hard place. As a small business owner, you need to have more retirement savings than just your business.

Start Your Retirement Plan

Once you realize you need a plan outside of your business, it’s time to get rolling. There are retirement options for small business owners, such as SEP-IRA, SIMPLE IRA, or a 401(k)..

  • SEP-IRA. This retirement investment (known as a simplified employee pension) works much like a traditional IRA and works great if you are a sole proprietor. You can contribute up to 25% or $57,000 of your income, and this is tax-deductible. You don’t pay taxes on this money until you begin to take distributions. Almost any business can establish a SEP.
  • SIMPLE-IRA. This retirement investment is for small business owners with less than 100 employees. Your contributions are pre-tax and taken directly out of your paycheck, much like a 401(k). Contributions are much lower, up to $13,500.
  • Individual 401(k). Another product geared towards sole proprietors, you can contribute up to $57,000 pre-tax, or 25% of your income, and your spouse can contribute the same amount as well. Contributions are pre-tax with distributions after age 59 ½. A 401(k) for small business owners allows you to make contributions as an employee, and you can also contribute as an employer. 401(k) options for small businesses can become complicated, and it’s best to consult your financial planner in order to determine which or if a 401(k) is right for you and your business.
  • Targeted 401(k) plans. Many providers are now offering small businesses types of more traditional 401(k), especially if you have less than 100 employees. These are worth looking into as well.
  • Personal Traditional or Roth IRA. Anyone who is working can open a traditional or a Roth IRA. Traditional IRAs offer tax deductions, and withdrawals from your Roth IRA are tax-free in retirement. These are easy to open and are often a great first step for people.

Partner with a Qualified Financial Advisor

As a small business owner, you probably already have an accountant to help manage your books. Similarly, you need someone to help manage your retirement. By partnering with a qualified financial advisor, they can help set you on the right path for retirement, as well as offer valuable tips to keep your money separate from the business’s money. The financial advisors at Anchor Wealth Management can help set you on the right path towards retirement and exiting your business for retirement as well.


The financial advisors at Anchor Wealth Management understand that as a small business owner, you have a lot on your plate, and taking the time to plan for your financial future can be difficult to carve out. However, it truly does not take a lot of time, and when you partner with a financial planner and get the ball rolling, they will manage the rest for you for the most part. However, the important step is the first step by meeting with us for a free consultation. Here is where we discover your financial goals, gather all of the necessary financial information from you, and then chart a course to ensure you do meet your goals. Partner with one of our financial advisors in Lanark or Rockford today!