As a small business owner, you’ve worked hard to build your dream, wearing multiple hats and navigating countless challenges along the way. But when it comes to retirement planning, many business owners find themselves unprepared. Unlike employees with a traditional 401(k), you’re responsible for setting up your own path to financial freedom.
The good news? With the right strategies, you can build a secure retirement while continuing to grow your business. Here are actionable tips to help you plan for the future you deserve.
- Start Early—But It’s Never Too Late
The earlier you start saving for retirement, the more time your money has to grow. But even if you’re getting a late start, don’t let that discourage you. Begin today by creating a plan and committing to consistent savings.
Tip: Use retirement calculators to determine how much you’ll need based on your lifestyle and goals. Her Retirement has a great calculator you can try out for free.
- Separate Your Personal and Business Finances
It’s common for small business owners to reinvest heavily in their businesses, but relying solely on your business as your retirement plan is risky. Market conditions, competition, or unforeseen events can impact your business’s value.
Tip: Open a retirement account separate from your business finances to build a diversified portfolio of investments.
- Leverage Tax-Advantaged Retirement Accounts
As a business owner, you have access to a variety of retirement savings vehicles, many of which offer significant tax advantages:
- SEP IRA: Simplified Employee Pension plans allow you to contribute up to 25% of your income ($70,000 or 25% of an employee’s compensation, whichever is lower in 2025).
- Solo 401(k): Designed for self-employed individuals, this plan allows contributions as both employer and employee, with limits.– Employee contributionsEmployees can contribute up to $23,500, or 100% of their compensation, whichever is less.– Catch-up contributionsEmployees who are 50 or older can contribute an additional $7,500. Employees who are 60 to 63 can contribute an additional $11,250.– Employer contributionsEmployers can make a profit-sharing contribution of up to 25% of the employee’s compensation or net self-employment income. The limit on compensation that can be used to factor the contribution is $350,000.
- Defined Benefit Plan: If you’re nearing retirement and need to catch up on savings, a defined benefit plan offers the potential for high contributions.
- Plan for the Sale of Your Business
Many small business owners hope to fund their retirement by selling their business. While this can be a significant source of income, it’s essential to plan carefully.
- Get a professional valuation to understand your business’s worth. Reach out to Her Retirement, we can connect you to a great resource for this.
- Develop an exit strategy that outlines how and when you’ll sell.
- Consider working with a financial/retirement advisor to reinvest the proceeds into a diversified portfolio.
Tip: Don’t count on selling your business as your sole retirement plan—it’s wise to have multiple streams of income.
- Create a Contingency Plan
Life is unpredictable, and events like illness, disability, or economic downturns can disrupt your plans. Protect yourself and your family by:
- Purchasing life insurance and disability insurance. Reach out to Her Retirement, we can help you with this.
- Creating a succession plan for your business.
- Building an emergency fund to cover unexpected expenses.
- Automate Your Savings
Running a business can be unpredictable, but automating your retirement contributions ensures that you stay on track. Set up automatic transfers to your retirement account to make saving consistent and effortless.
- Reduce Debt and Increase Investments
Paying off high-interest debt can free up more money for retirement savings. At the same time, focus on growing your investments to build wealth over time.
Tip: Work with a financial/retirement advisor to balance debt repayment with investment growth.
- Maximize Your Business’s Value
Boosting your business’s profitability not only helps in the short term but also increases its value when it’s time to sell. Focus on building systems, reducing expenses, and developing a strong customer base.
- Prioritize Health and Longevity
Financial freedom in retirement isn’t just about money—it’s about having the health and energy to enjoy it. Invest in your well-being by staying active, eating healthy, and scheduling regular check-ups.
Tip: A healthier lifestyle can also reduce long-term healthcare costs, which are often a major expense in retirement.
- Work with a Retirement Specialist
Retirement planning for small business owners can be complex. A professional can help you:
- Develop a personalized retirement strategy.
- Minimize taxes.
- Create a succession and estate plan.
Reach out to us at: retire@herretirement.com for help with your retirement (aka financial freedom) plan.
Bonus Tip: Use a Business Credit Card Wisely
A great business credit card can help you separate expenses, track spending, and even earn rewards points that can be reinvested into your business or used for travel perks. Consider a card like the Chase Ink Business Preferred® for its generous points system and benefits tailored to entrepreneurs. Just be sure to pay off your balance monthly to avoid interest charges!
Build the Future You Deserve
Retirement planning isn’t a one-size-fits-all approach, especially for small business owners. By taking proactive steps today, you can build a retirement that provides financial freedom and aligns with your goals.
Remember, it’s never too early—or too late—to start planning. Begin with small steps, stay consistent, and don’t hesitate to seek guidance: retire@herretirement.com. Your future self will thank you!
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