Investment Updates
Five Retirement Tips For Every Business Owner
Published Thursday, March 5, 2009 at: 7:00 AM EST
Entrepreneurs enjoy some unique opportunities when it comes to preparing for the golden years. But with all of the pressures of running a business, many owners neglect personal planning—and delays can be costly. For example, saving the same amount annually for 20 years will produce a nest egg 60% smaller than if you’d saved for 30 years (assuming a hypothetical 8% annual average investment return). And starting early isn’t the only path to a more secure retirement. Consider these five tips.
1. Think about owning. Many arguments for buying a personal residence make just as much sense where business property is concerned. In both cases, the chance to build equity usually beats shelling out rent you’ll never get back. In terms of retirement planning, if you own business property, you could hold onto it even after you sell the company, thus enabling you to collect rent from the new owner. Or if the property has appreciated significantly, you could sell it and use the after-tax proceeds to brighten your retirement.
2. Make the most of tax-deferred plans. It’s your company, so install the retirement plan that best suits your needs. For many businesses, that’s a 401(k). It lets you save more tax-deductible dollars than many other plans do, and it doesn’t oblige you to contribute for workers—or even for yourself.
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