Retirement Planning for Business Owners

Retirement Planning for Business Owners


As a business owner, you face many immediate needs: sales, customer service and managing your brand. However, you must still plan for the future – for both your business and yourself. What steps do you need to take to develop a retirement plan as a business owner?

Set a Goal

What do you want to do with your business when you retire? Do you want to sell? Transfer your ownership interests to a family member? Close the business and sell its assets? Once you set a goal for your business, you can begin taking steps, with the help of your financial and business advisors, to accomplish it. Make sure you have a clear picture of the amount of money you need to save for your retirement. Consider using a retirement calculator to determine a reasonable savings estimate. Consult with your financial advisor, however, to help you set a final retirement savings goal.

Develop Your Retirement Plan

You should start saving for retirement as early as possible. Starting to save for retirement later in life may mean you have to be more aggressive in your retirement savings strategy. If you plan to sell your business when you retire, your retirement plan should include getting an updated valuation for your business. Keep in mind valuations change on any number of economic factors. Building your retirement plan on an inaccurate business valuation can be extremely detrimental. You should start saving now, even if you plan to sell your business when you retire.

If you plan to transfer your business to a family member or other beneficiary, you should include a business succession plan in your retirement strategy. A succession plan may help ensure the survival of your business after you retire. You can address who will manage the business and take over your ownership interest, as well as minimizing potential income, estate and capital gains tax liability.

Choose Your Retirement Savings Plan

You can start saving for retirement by choosing a savings plan that works for your needs. There are several retirement savings options, and each has their own pros and cons: a 401(k), traditional IRA and Roth IRA to name a few. Consult with your financial advisor to choose the right retirement savings plan for you.

Build Your Business

Whether you plan to sell your business or transfer your ownership interests to another party when you retire, building your business is still the foundation for your retirement plan. If your business is a sole proprietorship, building your business is extremely important to make it more valuable. Consider adding employees and enlisting financial and business advisors to help grow your business.

As a business owner, retirement planning comes with unique challenges. To start planning your retirement, contact a Fifth Third Bank financial advisor.

The information contained herein is for information purposes only, is not designed to address your financial situation or particular needs and does not constitute the rendering of tax or legal advice. You should consult with your tax advisor or attorney for advice pertinent to your personal situation. Asset Allocation, Alternative Investment and Hedging/Diversification strategies are intended to mitigate the overall risk within your portfolio. Some strategies may be subject to a higher degree of market risk than others. An investor should understand the costs, cash flows and risks inherent in a strategy prior to making any investment decision. There are no guarantees that any strategy presented will perform as intended. Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor. Registration does not imply a certain level of skill or training.

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