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Retirement planning is especially important for small business owners and self-employed. Be sure to do the research of what's best for you and start saving.
Q: Are business owners less likely to plan for retirement than those employed by a company?
• Statistics indicate yes….owners are focused on making the business a success and forget to do personal financial planning along the way
• Small business owners may feel overwhelmed with the variety of retirement choices out there so it's important to get knowledge now and get saving.
Q: The sour economy has forced small businesses to look at their retirement plan costs. What some tips to help with controlling them?
• Give your plan a thorough check –up
• Renegotiate w/ your current provider…get several bids and provide them to your current provider if they're better
• Switch to small-business friendly providers like City Credit Union
• Use a low-cost plan – SIMPLE IRA. If you have employees you'll have to match their retirement contributions with as much as 3% of their compensation. It can be reduced to 1% in any 2 out of 5 yrs for poor years.
Q: What about small business owners where they are the only employee…or perhaps a spouse also…what are their options?
• SEPs (Simplified Employee Pensions) are most popular and very easy to set up
• Contribute and deduct up to 20% of self-employment income….25% if you're an employee of your own corporation.
• Maximum contribution is $49,000.
• You can open right up until April 15th
• Very minimal yearly fee with no annual government reports.
Q: Is there a "pension plan" type option for self-employed?
• The Keogh plan is the self-employed equivalent of corporate retirement programs.
• 2 types: profit-sharing and defined benefit pension plan
• To get deduction for current tax year, the account must be opened before year's end.
• Talk with your credit union financial advisor for details.
Q: Most important is to make retirement planning a priority?
• Yes, just like you have a business plan, a marketing plan, your retirement plan for you as the business owner, needs to be a priority.
• We all saw how an unexpected recession can change financial situations over night….be prepared.
For more information, contact City Credit Union at citycu.org or at (214) 515-0100