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Retirement Issues for Small Business Owner

Retirement Issues for Small Business Owner

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Retirement Issues for Small Business Owner

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  1. 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

  2. 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

  3. 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

  4. Investing • Other accounts • KEOGH plan • SEP IRA • Simple IRA • Individual must choose investment options • Stocks • Bonds • * Mutual Funds

  5. 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

  6. 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