Retirement Planning for Small Business Owners: Where to Begin
Running your own business gives you freedom but it also means no HR department, no employer 401(k), and no automatic savings.
If you’re self-employed or running a small business, you are the HR department. And setting up your own retirement plan isn’t as hard as it sounds.
Step 1: Shift how you think about retirement
Retirement isn’t an age. Think of it as a funding strategy for future freedom. Whether you call it retirement or financial independence, the goal is the same: build a cushion that lets you choose how and when you work.
Step 2: Know your options
Small business owners and freelancers can open their own retirement accounts. The most common options are:
SEP IRA: Easy to set up and great if you don’t need to contribute every year.
Solo 401(k): Higher contribution limits and Roth option. It is ideal if you want to save aggressively.
SIMPLE IRA: Good for small teams (if you have employees).
Step 3: Make it automatic
Once you’ve picked the right plan, treat contributions like a business expense. Automate transfers as much as possible, when income allows. Even irregular contributions add up over time.
Step 4: Revisit annually
Income changes, goals evolve, and tax rules shift. Review your setup every year or when business income significantly changes. End of the year is usually a great time for such a review.
You don’t have to do this perfectly, you just have to start. Setting up your own retirement plan is one of the smartest business decisions you can make. And getting a tax deduction while doing it is an added bonus!
👉 This is one of the challenges I help small business owners solve in the FAR Financial Clarity System™.
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Igor Aronov, the publisher of this content, is a registered investment adviser representative and owner of FAR Financial Inc.