As a business owner, there are a lot of things on your plate. You have to worry about hitting quarterly goals, boosting revenue, and somehow balancing it with your personal life.
With so much going on, it’s tough to think about the next 30-40 years when you’re just trying to get through the next five years with maximum growth.
Some things to Think About
How are you going to pack for your retirement party? Are you going to go light with little funds and even smaller plans? Or are you going to pack heavy with enough funds saved to do some travel, continue to give to your favorite charities, help your kids and grandkids — and have a full life in retirement? It’s important to think about what’s going to happen after you’re done with your business. Maybe you’re going to sell your business or hand it down.
Either way, it may be time to start thinking about retirement. How are you going to save up for retirement? How are you going to find purpose in retirement? These questions can seem daunting, so we’ll give reliable tips for business owners in this article.
Start your 401k Now
401k’s have tons of benefits, so it’s best to start yours today. Most people can start their 401k through their employer, so what do business owners do? The funny thing is it’s actually better for you to be the employer than the employee. Employees will put in a certain amount towards the account, which their employers match to a certain extent. The great thing for you is you can match as much as you want since you’re the boss.
Before even starting the process, consider how much you want to be putting away each month or quarter. Remember, you won’t be able to touch this money until retirement. Once your monthly sum is figured out, talk with a financial professional. Be sure to diversify your 401k as much as possible as well. Many people begin with a percentage of their income.
Once you have your 401k started — add to it consistently. Adding to your 401k account doesn’t mean you have to put your whole paycheck in, but think about putting a small percentage towards it each month. If your income is increasing as your business grows, consider increasing how much you’re putting in.
Create a budget for retirement – plan to spend more
The next step is to create a budget for retirement. How much are you likely going to be spending?
While this is a tough question to answer with inflation and other factors, plan to spend more; as humans, we tend to underestimate ourselves and overestimate others. Look at how much you’re spending from month to month currently, and think about what lifestyle you’ll be living in retirement. Are you going to be spending more in the future than you are today? How often are you going to visit family or travel abroad?
Once you have these questions answered, you can create a realistic budget for retirement. When you’ve made it, try living off of it. It may work on paper, but does it work in the real world? You can make changes if needed, to give yourself a better roadmap for retirement preparation.
Find purpose in work and work longer – Consider when you want to retire
Another thing you’ll have to consider is when you want to retire. Typically, Americans will retire in their early to mid-60s. However, studies show that working longer may pay off.
The studies are pretty simple; work longer and make more money. This makes it easier for retirement because you’re putting more money away and spending it over a shorter period of time. Working for an additional year will increase annual retirement income by 9%, and working an additional five years will boost annual retirement income by 56%.
That’s a 9% increase for just one year’s work — and 56% for five years of work sounds pretty good. Consider working a little longer, as your future self may thank you for it.
Define retirement needs and wants
When you’re retired, you’re going to have a whole lot of free time. Consider how you’re going to find purpose in retirement and what your priorities are going to be.
A big priority for many retired folks is family. If you’re in the same boat, think about how often you’ll be visiting or be visited by family. How are you going to continue to help and nurture them? Other priorities could be staying active or giving back to the community. Determine where everything should be on your priority list so when retirement comes, you’re all set.
Priorities may be easy, but finding purpose without a full-time job may be difficult. The best recommendation is to work with your passions. Take Tom Moore, for example. He’s been coaching NFL football for 42 years and says, “I want to coach as long as I can or as long as someone will hire me. I want to come back next year and the next year and the next year.” Tom was able to work with his passions. Write down what you’re passionate about and how you can work alongside them.
Consider income in retirement
Making income when in retirement goes back to finding purpose and fulfillment. In retirement, you could coach or mentor young business owners. You could be on the board of directors of smaller companies or your very own company. These are simple ways to keep your mind sharp, make some cash, and find fulfillment through serving and helping others.
You’ll still have some time on your hands, so consider other ways to keep active and income coming in. This could be as simple as making a dog walking business, or guiding tourists in nearby locations. Whatever you choose to do, find ways like these to keep active and find purpose while still bringing in cash.
Start investing today
Even if you’re new to investing, the best time to start investing is today. Start by deciding how much to invest and open a trading account on AmeriTrade or Webull or with your company. Next, decide where you’re going to put that money. It may seem daunting at first, but take your time and review a beginner’s guide to investing, and you’ll be all set.
Deal with debt immediately
Debt is not going to be great for your business or your credit score, so make sure to prioritize getting out of it. The fastest way to get out of debt is to make specific plans to do it and then perform daily habits to help you get there. There are a few other easy debt hacks you can try as well.
Create a transition plan for your business, identifying new leadership to run the business, so you can retire with peace of mind and retire on time.
You’ve been planning for retirement, but what will happen to the business when you retire? We can’t answer these questions, but you can.
When you’re just a few years out from retirement, identify new leadership to run the business.
Once you’ve identified the right people, be sure to mentor them and work alongside them on projects and with clients. You can teach them the right principles to guide your company on where you want it to go.
As you do this, you’ll be able to retire with peace of mind, because you know that your business is in good hands. You can still always go back, check-in, and maybe do some work if you’re feeling up to it. You’ve already set yourself up for success; now set up the business for success while you’re gone.
Retirement may seem like it’s a few years away, but the best time to prepare for it is today. Plan out how you’re going to spend your golden years so you can prepare now. What you want to be doing when you’re actually there, you won’t know for sure — but if you dream and prepare well — your retirement can be a wonderful step in your life.
Pack for your retirement party early and make the process and your retirement stress-free.