RETIREMENT RULES

One of the main deficiencies that exist in the world of small business is a lack of retirement planning. It’s not enough to say I have a 401K or a retirement savings account. The saying that many people spend more time planning a vacation than planning for their retirement is, in many cases, a true statement.

As a Certified Financial Planner I would like to offer several planning hints:

1. Have a savings destination amount: As with a business plan which provides a path to help reach your business destination, a projected amount required for your retirement should also be well-defined.  This is not a guessing game; a good retirement counselor can help you generate your own special amount. With this figure in mind you can determine how much you have to save to reach financial independence at retirement age.
2. Know where and how you want to live in retirement: That requires a look at your current lifestyle and how and where you want to spend your retirement years.
3. Update your retirement plan: just as chance is the only constant in the world of business, likewise your retirement plan will need to be changed. Review and adjust your plan once a year.
4. Invest wisely: there are a lot of investment options available. I recommend using a Certified Financial Planner as your guide through the retirement maze. Don’t try to do it yourself.
5. Don’t rush to make all your retirement funds quickly. You know how much time you have and there is a delicate balance between risk and reward with any retirement plan.
6. People are living longer: Your retirement age is unique to you. While it is only an estimate, allow yourself some flexibility and re-evaluate the start of your retirement as you get older. You may want to work into your 70’s or stop at 55.

The most important advice I can offer is to start your retirement saving today. Take at least 5% of all your income and use it towards your retirement. That figure may be higher but there is no small business owner that cannot afford to budget at least 5% towards a retirement program.