54
TOBACCO OUTLET BUSINESS
MAY/JUNE 2013
smaller home, you’ll save on housing and housing-related costs. If you hope to
travel more in retirement, you’ll need to plan for that added expense. Also, be
sure to include the cost of out-of-pocket healthcare as it will be higher when
you’re no longer working and relying on Medicare. Now, subtract from your
expenses retirement income you expect to receive from non-savings sources,
such as a pension or Social Security. This will leave you with the living costs
you need your retirement savings to fund.
Sound complicated? Visit sites like Kiplinger.com, SmartMoney.com and
Yahoo.com, where you’ll find retirement calculators that can guide you through
this process.
Step two: Know Your optionS
Fortunately, there are a number of retirement programs that provide tax
advantages to both sole proprietors and businesses with employees. (If you
already have a workplace retirement plan, congratulations, but don’t skip this
step before reading on to see if changing plan types is worth considering.)
Some of the more popular plans for small business owners are:
SIMPLE IRA:
Limited to employers with 100 or fewer employees, under
this plan employees make salary reduction contributions to the SIMPLE IRA
and employers make certain mandatory (but modest) matching contributions.
SEP IRA:
Geared toward self-employed individuals, although they can be
used by companies of any size, these plans are funded entirely by employer
contributions.
401(k):
These popular workplace plans allow employees to make pre-tax
contributions to the plan, which employers may match or partially match, up to
an IRS mandated limit.
Individual 401(k):
This sole proprietorship version of a 401(k) plan is for self-
employed individuals or married couples running a business with no salaried
employees. By allowing contributions from both the business and the business
owner (who contributes as an employee of that business), the individual 401(k)
in FocuS: retirement
While some businesses are sold
successfully, it’s dangerous to rely
on the eventual sale of your
company to fund your retirement.
I
/
Continued on page 56
