Many small business owners work way past the time they can retire. The reasons are simple: They enjoy their business and the challenges they face day in and day out. Many small business owners take an active role in their business even if the reins have been passed down to their business partners or their children. Financially, many small business owners are prepared. Others do count on their retirement that they have set aside, but believe social security will provide some of the funds they need to live well during their retirement years. If you are a small business owner and need help funding your retirement ,or don’t know where to start, follow the links below for more information.
Captain401 Raises $3.5 Million to Help Small-Business Employees Save for Retirement
Captain401 Inc. has raised $3.5 million in seed funding to help small businesses and startups give their employees retirement savings help similar to that of larger and deeper-pocketed employers.
The company’s site and service allows an employer to set up a 401(k) retirement savings plan for employees in minutes, without the paperwork, manual administration, repetitive data entry and high fees affiliated with traditional retirement plan providers like MetLife MET -0.47%, Fidelity, or Charles Schwab SCHW -2.45%.
And once employees enroll, it helps them set goals and automatically invest towards meeting them.
Investors in Captain401 include SoftTech VC, SV Angel, Y Combinator, Crunch Fund,Slow Ventures, Susa Ventures, FundersClub and several individual angel investors including NerdWallet co-founder Jacob Gibson and Stripe Chief Technology Officer Greg Brockman.
Captain401 co-founder and Chief Executive Roger Lee said he was inspired to help small businesses extend a 401(k) plan to their employees while earlier working an advertising tech startup, PaperG, which is still in business.
“I’m an advocate of personal financial health, and it’s the right thing to help employees save for the future and on taxes,” he said. “But without a full-time HR person, accountant and the like, it took us years to offer a 401(k) benefit, even though that would be a basic part of an offer to employees from a larger company.”
Retirement planning steps for small-business owners
According to the Small Business Association web site, there are 28 million small businesses in America — and that number is growing. For many of these entrepreneurs, their business may be their single largest asset.
So what happens when it’s time to retire?
Often, the business owner may look to cash out of the business either by selling it or by passing it on to family members. In both instances, the business owner needs to have a succession plan in place well before he or she plans to retire.
Unfortunately, many business owners don’t have a written succession plan. According to the Financial Planning Association/CNBC Business Owner Succession Planning Surveyreleased in 2015, 78 percent of respondents said they plan to sell their businesses to fund their retirement, and that the proceeds are needed to fund 60 percent to 100 percent of their retirement needs. Yet, less than 30 percent actually have a written succession plan.
The goal of a succession plan is to allow an organization to continue to conduct business even in the event of a key individual’s departure — whether that departure is planned (such as through retirement) or unplanned. While business succession planning is critical to the survival and stability of any organization, it also is crucial to the retirement goals of millions of aging baby boomers.
Small businesses could pool retirement plans under Obama proposal
President Barack Obama wants small businesses to help more Americans save for retirement.
One-third of American workers don’t have access to a retirement savings plan at work, and many of them work at small businesses. Only half of employees at businesses with fewer than 50 employees have access to a retirement plan through their employer, according to the White House.
As part of his upcoming budget plan, Obama wants to encourage more small businesses to offer retirement plans by making them easier to administer and providing tax credits to offset some of the costs.
His proposal also includes a new mandate for employers to make part-time workers eligible for their retirement plans. Workers who have worked for at least 500 hours per year for a company for three years would be eligible for this benefit.
This mandate is opposed by the National Federation of Independent Business.
“Many small businesses have a handful of full-time employees and larger part-time workforce,” said NFIB Research Director Holly Wade. “If they’re forced by the government to offer retirement benefits to everyone, some may very well discontinue the plan altogether. That would be a classic unintended consequence.”
