Small business: Planning for retirement

For many small business owners, planning for retirement often ends up on the back burner.

In fact, less than half of small business owners feel very or fairly well prepared for retirement, according to a recent report by The Guardian Life Small Business Research Institute.

While retirement planning may not seem like a top priority, your ability to save now for the future could mean the difference between having to work the rest of your life or being able to rest easy during those golden years, experts said.

"Very few people get to retirement and say, 'I've saved too much money,' " said Eric Kuniholm, a principal at Beacon Capital Management Advisors, a Boston investment firm specializing in self-employed and small-business retirement plans. "You're probably going to need more than you can save."

With that said, here are some retirement planning tips to consider.

Start early. There's no better time then the present to start saving for retirement, said Kuniholm. "People get caught up in their lives, and it's a hard start," he explained, noting in general you should allocate at least 10 percent of your income annually toward retirement. This could vary depending on circumstances (for example, age, etc.), he noted.

Prioritize. You're not going to start saving unless you make retirement planning a priority, said Kuniholm. You may live into your 90s, and if you don't want to depend on your children to support you, then you must start thinking ahead. Vincent Tona of Glen Cove, who owns Tiffany Carting in Brooklyn, said he doesn't want to be a burden on his kids and that's why he started a defined benefits plan (see www.definedbenefitplans.com) a decade ago. "For me, it's peace of mind," said Tona, 58, who worked with CJM Fiscal Management, a wealth management/financial advisory company in Melville. He allocates about 10 percent to 15 percent of his annual income to the plan each year.

Identify assets. To properly plan for retirement, you must get a handle on where your retirement assets are going to come from, said Charles Massimo, president of CJM Fiscal Management. Many people think they'll have the sale of their business to fall back on, he noted. If so, understand what your business is worth and how much you'd net after all expenses if it were sold to offset retirement needs, said Massimo. Understand your exit strategy so you can make better investment decisions and optimize any tax benefits, added Ernie Guerriero, head of qualified plan marketing for the Business Resource Center for Advanced Markets of the Guardian Life Insurance Co. in New York.

Forecast. Try forecasting how much you may need for retirement, added Guerriero. "We break it down into present value terms and build on certain assumptions of what might be there in the future." This will help with plan selection and also in determining how much you may need to put toward retirement.

Pick a plan. There are lots of retirement plans out there including an SEP (simplified employee pension), IRA and individual 401k, noted Kuniholm, who breaks down these and other common retirement plans in detail at smallbusinessretirement.com. Each comes with advantages and disadvantages, he said. Do your homework to see what plans are right for you, he said, noting that it is most important to commit to picking a plan and seek guidance if necessary.

Be flexible. You may start out with a certain exit strategy or pick a plan early on, and it may not fit your needs down the line. Review your plan annually to ensure you're still on track, said Guerriero. "Not only do business owners goals and objectives change over time, but tax laws change," he noted.