Retirement Plans for Employees created by Small Business Owners

Setting up a small business includes numerous responsibilities right from inception to the final stage of implementation.  One imperative decision among the myriad of tasks in the planning and the selection of the most fitting retirement options for yourself and also preparing retirement plans for employees.

The type of retirement options that can be chosen by small business owners depends on a number of important criterion such as:

  1. The size of the business
  2. The structural pattern of the business
  3. The amount of money which can be kept aside effortlessly
  4. Are their expectations of contributions by the employees too
  5. Does the administration has a priority over the contribution
small business retirement plan options
Source: bnc bank blog

Even after a grave contemplation of the above-given aspects, the most appropriate retirement planning for the employees can be baffling for the small business owner. They often they try to take the course which they are most familiar with i.e. 401(k) plan even though there are several other options, which they can retrospect upon, after a detailed study.

Why the need for retirement plans for employees?

Out of several reasons to offer a well-defined retirement option to your employees, the most compelling can be to maintain the edge of competitiveness by holding on to skilled employees. Profits and successful business does depend on competent staff and to extract their best, you have to offer them a secured future. Besides this, you can also avail tax benefits by having them deducted as business expenses.

retirement plans for employees
Source: cpi financial and insurance services

Here’s an interesting read on best retirement options for small businesses in 2018

Rummaging through the variety of Retirement Options

Each type of plan has its nuances and thus it is mandatory that you understand them thoroughly to formulate a functional plan which is in accordance with your priorities and your business needs. Let’s take a sneak peek at the available retirement options which have been leveraged to suit the business owners:

Simplified Employee Pension Plan [SEP-IRA]:

It is a simple plan in which contributions are only made by the employer and for each employee.  Since this retirement plan is not required to be filed with the government, a huge amount can be set aside with lesser paperwork and hitches.

The maximum amount to be contributed by the employer in the year 2018 should not be less than $55,000 or 25% of the employee’s net compensation.  In the years during which employees contribute, the employer is liable to contribute the same percentage to their account as made by them.

Simplified Employee Pension Plan
Source: gulf coast educators insurance

Savings Incentive Match Plan for Employees [SIMPLE-IRA]:

This plan works on the contributions made by both the employer and employee and is ideal for business, which has employees near to 100.  It is a kind of plan which witnesses salary reduction and is available against a meager participant fee.

The employee may contribute not more than $12,500 for the year 2018 depending on his compensation through salary deferral whereas the employer is required to contribute mandatorily annually. A $3000 catch up contributions is also allowed for employees who are more than 50 years of age.

Savings Incentive Match Plan for Employees
Source: race communications blog

Savings Incentive Match Plan for Employees [SIMPLE-401(k)]:

It more or less operates on the footholds of a SIMPLE IRA with the only and most lucrative option in the plan, being its flexibility, in letting the employer borrow loans or funds from it. The total contribution to be made to the account cannot exceed $55000 annually.  It may be subjected to periodical legislative changes.

Here is more details on the subject: Small business retirement plans.

It is essential to consider the trade-offs of each plan and the withdrawal features before divulging into the one, which would be most suitable to the business owner.

To maintain good staff, it is essential that business owners provide retirement options to employees. There are several retirement plans which can be opted from which SIMPLE-IRA and SIMPLE 401(k) are most commonly sought after.

Have any questions? Our service professionals at Flagship Financial can help you. Contact them today an book a consultation.

Steps to Safeguard Family before Retirement

Survival in the US market for us business owners has never been easy, in spite of it being one of the most lucrative markets in the world. Small businesses from tech to moms and pops keep popping up every now and then but they may vanish just as easily. As per statistics 28.8 million businesses in the US are small business i.e. having less than 100 employees with the looming threat of only 50% survival chances as their fifth year unfolds. This makes retirement plans for small business owners crucial step to safeguard their family before they plan to retire.

retirement plans for small business owners
Source: pacific united planning

To sustain, we need to set serious goals and be ready to adapt and evolve quickly to the changes around us. So, we often lose ourselves in drafting plans and implementing strategies for the business. Our business becomes our baby to be taken care of and nurtured with extreme devotion.

Meeting up with too many routine chores and stresses, and fighting the looming threat of survival, keeps us on our feet, and thus maybe along the way, we often forget that even while our business is our top priority to a secure future, retirement planning should simultaneously be considered on the same foothold.

family financial planning

Well, taking years to settle my business, by the time I got a chance to lift my head up I realized I was already standing on the threshold of 40. It had never really bothered me until then, as I was secure that I would be leaving behind a well-settled legacy for my family to inherit even though I had lost a good many years by not beginning my personal investments when I was in my 30’s.

Here is more information on retirement planning for small business owners.

But it was the struggle of the moms and pops business owners in their 60’s and 70’s which spurred on the need for an immediate and stringent retirement planning, within me. All their life these business owners had invested their assets and wealth thinking that their business sale would fund their retirement but when the time came, they were left disappointed. It was not easy for them or their children, who did not want to continue with their parent’s business, finding other sellers to take over and hand them liquidated asset in return.

retirement planning for small business owners
Source: kochie’s business builders

According to a survey by the Financial Planning Association/CNBC, it was found that almost 75 to 78% of the business owners targeted the funding of their families financial interest by the sale of their business. It invoked in me the need to establish an effective wealth plan so that my family could reap the benefits after my exit. This is when I learnt that expertise in the matters of retirement planning lay with skilled financial planners who had an array of strategies up their sleeves to help us with effective investments and schemes.

Here is an interesting article on why small business owners aren’t saving for retirement.

personal financial planning for small business owners
Source: woven capital

They recommended savings as per retirement calculator advising us on how much money we would be required to save annually and for how many years, they assisted in planning an exit plan depending on the changing markets, helped us in chalking out schemes which would cover family members and maximizing our investment returns as well as monitoring our investments to help us retire in grace and leave behind a smile on the faces of our family members.

Business owners in strive to maintain business often forget to invest for their retirement intelligently. Increasing awareness among the business class is gradually helping them to invest wisely and safeguard their family when they are no more. Do you want professional help and advise on this matter? You can get in touch with our service professionals at Flagship Financial. Contact Flagship Financial.

When Boomers face Retirement

When my generation of baby boomers, the ones born from the 1940s to the 1950s, wanted to retire in our mid-60s, we were faced with some very unexpected challenges. We grew up during the prosperous post-WWII years, which saw the greatest population growth in the history of the United States. We expected the state to care for us in our golden years, with aids such as social security and healthcare that they contributed to by way of taxes. Sadly, as we got closer to retirement, financial and health concerns were starting to cause a great deal of anxiety to a majority. This makes retirement planning for baby boomers so important.

When Boomers face Retirement
source: over sixty

For one thing, we are living longer and so are our parents; the nest egg we thought would take care of us and our elderly was falling short. Americans long viewed 65 as the age to stop working. It was considered full retirement age by Social Security for many, Medicare benefits kick in then and historical practice had established it as the goal. Me and my friends thought it wiser to keep working into our 70s. We figured working a few more years or drawing our Social Security benefits later would boost our retirement income, particularly since some didn’t even receive pensions. We had to take on the responsibility for saving for retirement but often failing to do so adequately. Naturally, those of us with money worries are more likely to keep working past normal retirement age to help sustain our income.

baby boomer retirement planning
Source: win some aunt

“We keep adding years of life and it all got tacked on to the retirement period and it never changed the retirement age. “In essence, 70 is the new 65,” says the Vernon report. A recent Willis Towers Watson survey of nearly 5,000 employees found that 37 percent of employees expect to work past age 70, up from 30 percent two years ago.

When I started to worry about meeting the cost of care for my parents, I began to wonder how my children will cope when it is their turn. Everyone wants to leave an income for their partners when they pass as well as a legacy for their children. But working into one’s 70s is easier said than done. Folks retire earlier than planned because of health problems, layoffs or care-giving demands. Older employees are also forced out sometimes.

retirement advice
Source: huffpost

However, the good news is that good solid advice took care of my concerns. I figured that I had probably 10 or 15 years to fill the gap between my savings and the ideal amount. It is in fact the best time to decide what we want our remaining decades to look like, and put in place a plan to get there. In other words, I got help to determine clear goals and objectives.

financial planning for retirement
Source: direct cannabis network

I learned that financial planning experts are equipped to identify sources of income and balancing those against expenses. They help draw up the retirement budget and formulate a long-term personal plan to follow. This took care of the fears and anxieties of my friends, of outliving our savings. We got all the guidance we needed on protecting wealth for the next generation, estate planning and growing the nest egg to provide for our loved ones in the years to come.