A: Small business owners often postpone retirement planning because they think the eventual sale of their business will provide them with the money they need for retirement. The problem with thinking that way is that it's extremely difficult to accurately gauge what your business will be worth when you're ready to retire.
If you haven't yet put in place a strategy for retirement, there are several options you might want to discuss with a financial advisor and your tax professional. They can help you create an approach suited to the type of business you have, as well as your family's personal needs and goals. Part of that strategy would likely be ensuring that your husband is funding his 401(k) account to the maximum extent allowed. You might look into whether you qualify for a spousal IRA, which your husband could contribute to on your behalf, although he must earn more than his combined contributions to his own IRA and the spousal IRA. Spousal IRAs can be used by spouses of both genders, including couples in same-sex marriages.
Depending on the size of your business, you could also consider a SEP IRA, a SIMPLE IRA or an individual 401(k), all of which may have tax advantages that could increase your ability to fund them. To learn more about the financial challenges of women entrepreneurs and how they're meeting them, read "So Long Corporate World. Hello, Start Up."
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We'll answer frequently asked questions here.
3 Questions to Ask Your Advisor
- Is there a way to know whether we're saving enough for our retirement?
- If I do sell my business, how should I invest the proceeds for my retirement?
- How large a pretax contribution can I make to a SEP IRA or an individual 401(k) each year?
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