Get Serious About Saving For Your Golden Years
   By B.J. Addington

Saving for retirement should be at the top of the to-do list for small-business owners. Unfortunately, that’s not the case. Like most other Americans, owners of small businesses remain unprepared for funding their golden years.

More than half of non-retired adult Americans have either not begun saving or report having saved less than $10,000 for retirement, according to a nationwide Thrivent Financial survey.

The survey also found that 62 percent of Americans have never estimated how much money they’ll need for retirement.

“Americans are simply not accumulating sufficient assets to adequately meet long-term retirement needs,” states Pam Moret, executive vice president for Thrivent Financial. “This survey is one more wake-up call to all Americans to get serious about planning for their futures.”

Some small-business owners have procrastinated retirement planning because they look to Social Security as a way to partially fund their retirements. But even that may be at risk.

In February, Federal Reserve Chairman Alan Greenspan called on Congress to trim Social Security and Medicare benefits in the future. Greenspan warned of budget-crippling entitlement costs that will come due as baby boomers begin to retire. He stated that trimming Social Security benefits and extending the retirement age could be solutions for curbing entitlement costs.

With Social Security on shaky ground and less than stellar retirement savings, small-business owners should get serious about retirement planning.

“Clearly, too many Americans are operating in the dark when it comes to meeting their future retirement needs,” says Moret. “Savers who steadily and methodically set aside even modest dollars for retirement will be winners in their golden years.”

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6-Point Checklist For Retirement Planning

Financial gurus estimate that you’ll need 70 percent to 80 percent of your pre-retirement income to maintain your standard of living when you retire. If you add extras like an around-the-world tour or snazzy digs in an upscale retirement community, you could need even more dough.

And don’t forget that Americans are living longer than they did in the past. You might easily find yourself enjoying a full retirement for 20 years or more. That means you’ll need an even larger nest egg just to maintain your pre-retirement lifestyle.

So start saving now, no matter what your age. Here’s how.

1. Determine your needs. Get help estimating how much you need to save to fund the retirement you want. Go to the AFS Retirement Calculator.

2. Evaluate your savings options. Most income earners can contribute annually to a Roth IRA or a traditional IRA. Compare differences between the two before you decide. Go to www.rothira.com to find out more.

3. Learn about retirement plans specifically geared to small-business owners. They come in alphabet soup of choices: SEP, SIMPLE, Keogh and others. To compare the advantages and disadvantages of the plans, go to the Small Business Retirement Savings Advisor at the U.S. Department of Labor Pension and Welfare Benefits Administration. The site provides an easy-to-understand chart that compares different types of retirement plans.

4. For the tax implications of retirement plans, turn to IRS Publication 560, “Retirement Plans for Small Business.” You can download the publication at www.irs.gov.

5. Investigate new savings vehicles, like the individual 401(k) that was introduced in 2003. These plans generally have high tax-deductible contribution limits for people who need to play catch-up in funding their retirement plans. You can also borrow money from the plan. AFS Members have access to an individual 401(k) through OppenheimerFunds. Find out more.

6. Keep informed about savings plans that are currently being considered at the federal level, such as the Lifetime Savings Accounts. Go to www.lifetimesavingsaccount.com to learn more.

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