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Why Business Owners Should Invest In Retirement Early

The American economy, the world’s most powerful in terms of GDP, is chock-full of business owners. According to the U.S. Small Business Administration, small businesses employ 47.3% of the American workforce and generate nearly half of the country’s economic activity at 43.5%.

Considering the entrepreneurial nature of business owners, assuming they thoroughly prepare for retirement is reasonable. But it’s alarming how many small business owners fail to save for retirement. Most of them justify their lack of retirement planning with seemingly-solid ideas. These ways of thinking are often short-sighted and forget to take the future into account.

Telling others what to do is easy. Carrying out these changes is much more difficult. If you’re a business owner, consider the ideas below about saving for retirement earlier. You might end up thanking yourself later.

Is Working Past 65 a Safe Plan?

Small business owners widely view hard work as an important cultural value. Working long hours and making important business decisions is special to them. Running their businesses gives entrepreneurs peace of mind. With these admittedly-virtuous values, it’s easy to see how owners can justify not saving for retirement.

A 2019 study of American small business owners indicates that 40% aren’t confident about retiring before 65. Although some people work through their 70s or even longer, nobody can stop disease or old age from taking away their ability to work. Even if you don’t plan on ever retiring, failing to invest for retirement is irresponsible to your community, family, and yourself.

Should You Invest Everything Into Your Business?

As a business owner, your finances are essentially your business’s finances. Many owners take such great pride in their businesses that they live frugally just to grow their operations. The idea of leaving a healthy business to children, other family members, or trusted company employees is present in most business owners’ minds.

Rather than investing early, these dedicated owners justify putting off saving for retirement now in favor of pulling money aside later once their businesses have grown. Although this is a valiant effort, there’s no guarantee your business will hit a growth spurt. By gradually putting back money over time, you won’t harm your business’s operations. After all, taking away a major chunk of change at once can cause your business to go belly-up.

Tips You Can Use to Invest in Retirement Right Now

You should start saving money as soon as possible. Money grows exponentially over time, so starting early will benefit you. Using a financial planning program or spreadsheet is also recommended. Tracking your savings will help you evaluate your decision-making and motivate you to save more.

After paying off all debt and putting back an emergency fund, make your money work for you by investing it. Never forget how crucial diversification is. Always spread your savings across multiple investments like stocks, bonds, and mutual funds. Especially while you’re young, it’s advisable to invest in new areas with higher upsides like cryptocurrencies. You should watch cryptocurrency prices like BTC for the right time to buy in. Placing up to 20% of your portfolio in cryptocurrency is an often-underutilized investment strategy that you should also consider. These can be volatile investments so you will want to watch them daily, but like with any other investment you should be focused on the long term gains rather than shorter ups and downs.

How About Selling Your Business Upon Retirement?

The study I mentioned before also found that 18% of American small business owners plan on selling their businesses to pay for retirement. This idea isn’t good for several reasons.

First, assuming your business will never go under is naive. The majority of businesses fail just a few years after starting. Even if you’ve got superb business acumen, you can’t predict market trends, pandemics, or regulatory changes. Second, you can’t guarantee someone will buy your business when you’re ready to sell. Finally, even if your business does stay afloat over the long run, its value could drop substantially due to unforeseeable obstacles. The building it’s in might cave in or the its neighborhood could deteriorate and cause property values to drop.

Matt Shealy

Matt Shealy

Matt Shealy is the President of ChamberofCommerce.com. Chamber specializes in helping small businesses grow their business on the web while facilitating the connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.

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