Starting a small business and being a business owner is rarely a smooth and easy journey. There are a number of challenges from finding start-up capital, to identifying your target market, to hiring and managing staff, to figuring out how to grow and develop your business.
One of the biggest hurdles that many small business owners often don't think about, at least not in the early stages of business, is how to create a retirement plan that will protect their future. In fact, if you left a full-time job with retirement benefits when you started your business, the idea of saving for retirement without mandatory pre-tax 401(k) contributions and an employer willing to match them may seem like a faraway dream that will never be possible for you.
The ultimate goal in retirement planning is to save money for the future. So it is a very smart idea to spend some time with your small business accountant and possibly a financial planner to identify the best way to start saving.
A very close second goal for retirement planning should be to regain a sense of control over your financial future in general. How do you overcome the feeling that you will never get ahead and will simply have to work forever? Here are a few ways to start thinking about your retirement and put the sense of control back in your hands.
Think About Your Retirement Dream
The first thing you should do when it comes to retirement is consider what it actually means for you. How old will you be? Where will you live? Who will you be sharing your life with? Are you willing to work a limited schedule, or do you want to escape to a deserted island? What kind of lifestyle will you have?
You may not be able to say with certainty that your dreams will be realistic in 10, 20 or even 30 years, but that's okay. This step is all about identifying your ideal retirement situation; you'll be able to factor in rising costs, current debt and long-term savings with your financial planner to bring your dream back to earth. But you need to start with your dream.
Don't Wait to Get Help
As a successful business owner, you have likely mastered the art of asking for help when you need it. There may be no clearer time to call in for reinforcements than retirement planning. Starting a search for a financial planner early in your retirement planning process can not only help you reach your goals faster, but you can also reassure yourself that any sacrifices you make now will be worth it in the end.
You can also start the process on your own with the IRS Retirement Plans Navigator and Kiplinger's Retirement Savings Calculator.
Take Stock of What You Have Working for You
The gap between where you are right now and where you want to be may be tremendous, but that doesn't mean it's not achievable. It is important to research and analyze all of your options at some point in your planning, but the good news is that the factors working to support your retirement planning don't all have to be financial.
You have a lot working for you as an entrepreneur that you can apply to your retirement planning. You know how to start something from nothing and make it a success. You are used to setting goals and working hard to accomplish them. You understand how to cut, shift and build to make it work.
If you're starting this process early, you have a lot of time to make changes to line yourself up for meeting your retirement goals. If you have less time on your side, you may need to make a few extra compromises, but being a small business owner can still work to your advantage in terms of having the ability and the determination to do whatever it takes to get to where you want to be.
Start the Process...NOW
Most small business owners, regardless of where they are in the retirement planning process, feel like they have a very long way to go to reach retirement. The solution to this is simple: Don't wait!
Start by being proactive about research, talking with a professional, and making any necessary changes that will facilitate retirement planning for duration of your business. And make saving a priority. Combined with effectively cutting costs and using bootstrap techniques when possible, the simple act of aggressive saving can change your perspective on retirement planning for the better.
It's important to stop worrying about what may or may not be possible by doing something to move the process forward. Taking action, even if it's just a baby step at a time, can give you a sense of control that helps to reduce the feelings of being overwhelmed.
The most realistic retirement plan for you should make you feel hopeful and not cause you to break out in a sweat at the mere thought of it. You will probably have to continue to make compromises to get there, but if you can come away with a plan that feels achievable, you're on the right path to making retirement more than just a dream from your corporate days.
