Business ownership can have many advantages, including financial independence and growth potential. Along the road to success, though, are financial realities owners must contend with—like retirement planning.

In building their businesses, owners sometimes dip into their personal accounts to fund operations. This can lead owners to shortfalls in important areas. Indeed, many small or medium-sized business owners don’t have retirement plans and often wait years until they can finally afford them.

When that day finally arrives, owners may need to expedite contributions to their retirement plans to “catch up.” Here are 4 steps to think about when enhancing your retirement planning strategy.

1. Know Your Retirement Options

When you own a small business, you don’t have a 401(k) plan with matching contributions from your employer—you’re all you have. But there are many workable options you can consider in retirement planning.

In a traditional IRA, you can contribute up to $7,000 annually (or $8,000 if you’re over age 50). Contributions are made pre-tax. In a Roth IRA, contributions are made after taxes have been deducted, but withdrawals and contributions in retirement are exempt from taxes, as is investment growth.

You can also choose a simplified employee pension IRA if you’re self-employed and contribute 25% of your annual income or $69,000 per year, whichever is less. In a solo 401(k) plan, you can make dual contributions—one as an employee and another as your employer. You can also start a defined benefit plan if you’ve already hit contribution limits on other plans.

2. Get Rid of Past Debt

Carrying past debts—especially those with high interest rates—could cause issues leading up to retirement. High-interest debts typically include credit cards, car loans, home mortgages, or bank loans for business equipment.

With past debts out of the way, you have more resources for retirement. Your monthly expenses may go down, and you have the opportunity to grow long-lasting savings. Look at your current debt situation, weigh the balances and interest rates, and pick which high-interest debts you can pay off now or in the near future.

3. Plan for the Future

Especially if your business provides your primary source of income, it might be a good idea to consider your company’s future in retirement planning. End-of-career options could include exit strategies, succession plans, or the outright sale of your business to a third party.

A solid transition plan can actually strengthen your company. A good strategy makes your business more attractive to outside buyers. If you plan on transferring ownership to family members, it’s good to have a plan ready for a smooth succession.

4. Get Professional Help in Retirement Planning

A qualified financial advisor can be a small business owner’s best friend, especially when it comes to retirement planning. The ins and outs of running a business can make your family finances more complex and diverse. If you have other employees to manage, you may need to think about what benefits and options may be pertinent to their health and happiness.

When making catch-up contributions to your retirement plan, a financial advisor can be a significant ally. They can assess your current finances, find gaps in your retirement savings, and structure a detailed plan for attaining your business and retirement goals. They can also identify investment opportunities that fit your ambitions and risk tolerance level.

At Blair Capital Management, I help small and medium-sized business owners craft plans and strategies for their financial needs, including retirement planning, wealth management, estate planning, and more. Contact me online, call (914) 413-9904, email johnblair@blaircapitalmgt.com, or schedule an appointment here.

About John

John Blair is President and Founder of Blair Capital Management, LLC, a Registered Investment Advisor (RIA) that endeavors to offer personalized service and customized investment solutions to individuals, trusts, and high-net-worth investors. After over 40 years of experience in the financial markets, John has had a front-row seat for every bull and bear market and wants to offer his experience, knowledge, and skills to individuals rather than institutions. With an unwavering dedication to acting as a fiduciary and a desire to build long-term, successful relationships, John helps his clients pursue their financial objectives. He cares deeply about safeguarding and growing their wealth, so they can focus on their lives—not their money. He strongly believes in a disciplined approach to investing with paramount importance placed on preservation of capital and measuring risk and reward through all circumstances.

John holds a bachelor’s degree in economics and master’s degree in business administration from the University of Southern California, and also completed graduate work in economics and philosophy. John and his wife of 45 years have four grown children and 13 grandchildren. In his spare time, he loves to read biographies and books about history and finance, and is a huge horse racing and football fan. John cheers for everything University of Southern California, and has been very involved in alumni affairs and mentoring students.

Blair Capital Management LLC (Blair Capital) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Blair Capital and its representatives are properly licensed or exempt from licensure.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Blair Capital strategies are disclosed in the publicly available Form ADV Part 2A.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

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