Improvements should be made to small business owner retirement plans from the provider's end according to one expert, but Lehigh Valley Business says while the industry remains as it is today, entrepreneurs can take several steps on their own to ensure lasting savings once they are ready to close shop.
What business owners can do now
John Rossi, an accounting associate professor at Moravian College, recently told Lehigh Valley Business that entrepreneurs should be mindful that, especially in a time when trends change faster than ever, their companies cannot be completely relied on for life-long financial security.
"Don't plan on the business being your entire nest egg," he said. "What was a good business today may not be in 10 years."
Rossi suggests CEOs keep an eye down the road on their own financial futures as well as those of employees. Men and women in charge of their own companies, he explains, eventually are responsible for providing themselves and a dedicated workforce with the necessary resources for success after retirement.
The accounting expert says taking good financial investment advice to heart is crucial if business owners don't want to find themselves in need of cash after a planned retirement.
"There's a lot of people going back to work for survival," he told the news source.
Three steps to better retirement planning
Although structured retirement plans are beneficial as-is, Small Business Administration senior economist Jules Lichtenstein believes that business owners who focus on managing retirement plans for themselves and their employees can change to make financial plans more convenient for the holder and business owner in the future. Lichtenstein's op-ed in Entrepreneur Magazine outlines three specific changes he would like to see in coming years.
The first change, which would be made by federal regulators, is for small business owners to be legally obligated to contribute to their own retirement funds. This is not currently in legislature, but the expert noted that requiring entrepreneurs to stash away funds with every paycheck would offer an insurance policy many businesses owners fail to build today.
Making it so that workers in small business begin with 401(K) plans in place at the start of employment is another suggestion Lichtenstein has for the federal government. A study by AARP shows that when employees come into a job with a retirement plan already set up, they are more likely to participate. In contrast, the study notes, having to take steps to start feeding a 401(K) can be a roadblock for workers who would otherwise take part in the plan.
Lastly, the expert noted that limiting the choices in plans company owners can select from, and decreasing the amount of time it takes for them to do so, could greatly benefit the small business community.