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Retirement Planning for Business Owners

As a small business owner, I’m not telling you anything new when I say the average American has nothing saved for retirement1. I feel it’s safe to assume (since you’re reading this) that you’re above average and have a nest egg started. However, being the owner of your business means you also shoulder the retirement of your employees – no easy feat! But, before we get into the nitty gritty of the options, let’s first examine why providing retirement benefits to employees is even important.

When you chose to enter the entrepreneurial space, it was most likely to help people in some way. Maybe you provide a service to make lives easier or a product that saves people time. Sure, financial freedom and time freedom are huge motivators for you as well, but ultimately you wanted to improve something.

A part of that carries over as a desire to improve the lives of your employees as well. In general, being an entrepreneur, you’re a people person. You care, that’s a good thing! You can help make the lives of your employees better, simply by providing a savings vehicle for them.

What benefits do I get for providing a small business retirement plan? 

Providing retirement benefits can also have significant (positive) impacts on your business, making it a win-win for both you as the employer and your employees. First, it makes your compensation package more competitive and desirable. When hiring you want to attract and recruit the best quality candidates out there, most of whom are likely to be drawn to a company with retirement benefits.

Second, depending on which type of plan you choose, your business can benefit from tax deductions, tax credits, and other incentives. Sign me up for saving money! And third, you’ll be even better positioned to help yourself with retirement – happy boss, happy business, right?

But aren't there costs of a small business retirement plan?

It wouldn’t be fair of me to continue harping on the benefits of providing a retirement option without addressing the elephant in the room – the costs. Most likely, it will require professional assistance to set up and maintain retirement benefits, but the savings mentioned above are a way to help offset some costs. And, as technology in this space continues to improve maintenance, service, and record keeping, the costs associated with providing benefits will also continue to decline.

To keep from having an overly long post, I broke up the nitty gritty into two posts, summarized below - if you’re going it solo, or if you’ve got employees. Below are the available options and in the next two posts I’ll go into detail about each.

Solo entrepreneur (aka solopreneur):

  • Traditional IRA
  • Roth IRA
  • SEP IRA (Simplified Employee Pension)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Defined Benefit Plan
  • Solo 401k/Single K

Small business owner:

  • MyRA (no longer an option, but you may have heard of it, so I wanted to mention it)
  • SEP IRA (Simplified Employee Pension)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • SIMPLE 401k (Savings Incentive Match Plan for Employees)
  • 401k
  • Defined Benefit Plan

No matter your company size or projected growth, now is the time to think about including retirement benefits in your business. Read on to find out which is right for you.


  1. Reed, E. (2019). What Is The Average Retirement Savings in 2019?. [online] TheStreet. Available at: https://www.thestreet.com/retirement/average-retirement-savings-14881067 [Accessed 13 May 2019].
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