Skip to main content

Retirement plans for small business owners are often overlooked. Small business owners spend most of their time consumed by building the best business possible, making customers happy, and taking care of their employees. So it’s important that they focus on their own retirement plan.

Let’s look at why retirement planning is important, and how to choose the right types of retirement plans for small business owners.

Why is retirement planning important for owners of small businesses?

As a small business owner, retirement planning is crucial to help ensure financial security and a comfortable retirement. As we said before, you have likely spent considerable time building your business and focused on the future of your team, but that often means that you haven’t thought much about the day when you finally step away from the business you built.

In our blog, we’ve mentioned that “Retirement planning is the process of intentionally working through the many factors to consider in order to retire comfortably. It involves calculating your expected retirement expenses and then figuring out how best to save for them. Still, it also involves soul searching and thinking of what kind of retirement you want to pursue.”

Here are some tips on how to get the most from retirement planning:

Start early

The earlier you start planning and saving for retirement, the more time your money has to grow. Even if you can only contribute a small amount each month, it can make a big difference over time.

Consider a retirement plan

There are several retirement plans available to small business owners, including a Simplified Employee Pension (SEP) plan, a Savings Incentive Match Plan for Employees (SIMPLE) IRA, and a 401(k) plan. These plans can offer tax advantages and help you save more for retirement. We’ll look more closely at these later.

Diversify investments

Invest your retirement savings in a diversified portfolio of assets to help manage risk and maximize returns. Consider seeking professional advice from a financial planner or advisor.

Review and adjust regularly

Regularly review your retirement plan and adjust your contributions and investments as necessary. As your business grows, your retirement needs may change.

Challenges for retirement planning for small business owners

Simply put, there are only so many hours in a day. Effective retirement planning takes time, effort, and experience.

As an example, the best retirement plans for small business owners with employees may not be the best retirement plans for small business owners without employees. If you don’t know which to choose, it may negatively impact your financial situation.

Another challenge is that many small business owners have variable income. Unlike those who draw a steady corporate salary, your business may have lean periods throughout the year. A retirement plan that’s flexible may allow you to contribute in big chunks over time, as opposed to a steady payroll deduction.

The good news is that a financial advisor can help with these challenges. They have the time to stay on top of your plan, the experience to execute it, and the knowledge to understand how to get you where you need to be to meet your goals. They can help, for example, put together a plan of expected profit so you can determine your contribution percentage, overcoming the variability in income.

Benefits of retirement planning for small businesses

a small business owner compares retirement plans

Retirement planning may have tax benefits. When you contribute to a retirement plan, most allow you to do so on a pretax basis. Much of the time, contributors are able to deduct portions of their contributions from federal and state taxes. There have been recent changes in laws that may allow you to get a tax credit simply for opening a retirement plan.

Bringing in a professional financial advisor can help you prevent leaving money on the table.

Types of retirement plans for small business owners

Forbes says “You have plenty of great options to save for retirement if you’re a small business owner. So, take a moment away from your daily tasks to look into your own retirement strategy.” Generally, we will work with small business owners to help them choose between these 5 types of retirement plans:

1. 401K

A 401(k) is a retirement savings plan that is offered by many employers in the United States. It is named after the section of the U.S. tax code that governs it. Under a 401(k) plan, employees can elect to have a portion of their pre-tax income automatically withheld and contributed to a retirement savings account. If you do not have any employees, you have the ability to set up a Solo 401(k), which operates the same way as a traditional 401(k).


A SEP IRA (Simplified Employee Pension Individual Retirement Arrangement) is a type of retirement savings plan that is designed for self-employed individuals and small business owners. A SEP IRA is “inexpensive for employers to establish and easy to maintain. Employer contributions aren’t required annually, making it a good option for business owners who only want to contribute during high-profit years.” All contributions are immediately vested so if you have high turnover amongst your employees, you’ll want to take that into consideration.

3. Simple IRA

A Savings Incentive Match Plan for Employees (SIMPLE) IRA is easy to set up and has a low contribution and matching requirements for employers. It allows employees to contribute more than they could with traditional or Roth IRAs.”

4. Traditional IRA

A traditional IRA (Individual Retirement Account) is a type of retirement savings account that allows individuals to save money for retirement on a tax-deferred basis.Contributions you make to a traditional IRA are in most cases fully deductible, but that may depend on your income and other factors.

5. Roth IRA

A Roth IRA is a special individual retirement account (IRA) in which you contribute to the account with after-tax money, and then all future withdrawals are tax-free if the account has been opened for over 5 years and you are older than 59 ½.”

As you can see, there are a lot of choices for retirement plans for business owners. Making sure that you pick the best option for you and your goals may make all the difference in your retirement years. Fortunately, you don’t have to choose alone–and we recommend that you don’t.

Schedule a free assessment with Dechtman Wealth Management today.

Important Disclosure Information

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Dechtman Wealth Management, LLC [“DWM”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from DWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. DWM is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the DWM’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at

Please Note: DWM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to DWM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Remember: If you are a DWM client, please contact DWM, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.

Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Join our newsletter

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
Jordan Dechtman

A financial services professional for over three decades, Jordan Dechtman’s mission is to help clients live better with more opportunities for fun and family time. Ideally, his goal is to help them achieve their dreams. Jordan brings a unique set of skills and experiences to the industry. His work ethic and drive to improve both himself and those around him have been honed during his 30+ years as a high net-worth private wealth advisor. Jordan holds a BS in Finance from the University of Arizona. Through his memberships in both the Financial Planning Association and the Financial Services Institute, he is dedicated to championing the financial planning process. Based on assets under management, Jordan has consistently been recognized by Securities America as being among the top 1% of over 1900 registered representatives.