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Retirement Issues for Small Business Owner. 1) Value of the Business Selling outright Liquidating Passing on to family Value/Net Worth of the business, many times, is the most valuable asset of the business owner. Retirement Planning. Individual is responsible for retirement income Example

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Retirement Issues for Small Business Owner

  • 1) Value of the Business

    • Selling outright

    • Liquidating

    • Passing on to family

  • Value/Net Worth of the business, many times, is the most valuable asset of the business owner


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Retirement Planning

  • Individual is responsible for retirement income

  • Example

    • Age 25, retire 60, live to 85+, need 80-90% of income

    • $2,000,000 goal

    • Maximum social security benefit = $1,742/month

    • Saving goal

      • $870/month, starting at age 25

      • $2,103/month, starting at age 35

      • $5,800/month, starting at age 45


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Investing

  • IRS provides many tax-deferred or tax-free investment accounts

  • IRA – Individual Retirement Account

    • Deductible

    • Non-deductible

    • Roth

  • SEP – simplified employee plan

    • Less than 25 employees, 15% of compensation, maximum $22,500/annually per person


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Investing

  • Other accounts

    • KEOGH plan

    • SEP IRA

    • Simple IRA

  • Individual must choose investment options

    • Stocks

    • Bonds

    • * Mutual Funds


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Other Benefits

  • Medical

    • $5 deductible, prescription

    • $690/month, $8,280 for family of 4

  • Dental

    • Preventative

    • Restorative

  • Disability Insurance

    • 66% of $50,000, age 30

    • $240/month, $2,880/annually


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Other Benefits

  • Life Insurance

    • $500,000 face value, age 35, nonsmoker, good health

    • Term insurance - $860/year

  • Time Off

    • Vacation, sick, personal time

    • Average small business owner works 74 hours per week

    • Takes 4 weekdays off


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