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The Basics Q&A: Will This Small Biz Owner Be Ready for Retirement?

Q: As a small business owner, I'm having trouble saving for retirement and I'm relying on my husband's retirement plan. What other options do I have?

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.

Answered by:


Debra Greenberg Director, Personal Retirement Strategy and Solutions at Bank of America Merrill Lynch

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 "Why It’s Not ‘Business As Usual’ for Women Entrepreneurs"

3 Questions to Ask Your Advisor

  1. Is there a way to know whether we're saving enough for our retirement?
  2. If I do sell my business, how should I invest the proceeds for my retirement?
  3. How large a pretax contribution can I make to a SEP IRA or an individual 401(k) each year?

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This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument, or strategy. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.

Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.

Bank of America Merrill Lynch is a marketing name for the Retirement & Philanthropic Services businesses of Bank of America Corporation. Banking activities may be performed by wholly owned banking subsidiaries of Bank of America Corporation, including Bank ofAmerica, N.A., Member FDIC. Brokerage services may be performed by wholly owned brokerage subsidiaries of Bank of America Corporation, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ('MLPF&S'), which is a registered broker dealer and Member SIPC.


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