5 Tips for Serial Entrepreneurs to Ensure a Financially Secure Retirement

by | Published on Feb 26, 2018 | Record Retrieval Services

Serial entrepreneurs are risk takers. They accept the challenge of running new enterprises again and again, marching forward in the hope of achieving greater rewards. One of their major concerns is to provide appropriate workers’ compensation coverage for the employees working for them. This is especially relevant for businesses that involve some kind of risk, or where there is more likelihood of the employees getting injured. Workers’ compensation provides reasonable coverage for injured or ill employees. The program utilizes medical record retrieval services to obtain medical records for the very important review process. Apart from this important insurance concern, serial entrepreneurs must also think seriously of good retirement plans – something that working professionals with steady working hours, regular pay checks and appropriate retirement plans may take for granted. Serial entrepreneurs need to make sure that their employees are also saving for the future.

There are certain effective ways for serial entrepreneurs to ensure a financially secure retirement period for themselves and their employees.

  1. Have a clear understanding regarding your retirement income sources: The main sources of retirement income for entrepreneurs are retirement accounts, social security, and the sale of their business. If deciding on selling the business, entrepreneurs have to determine an accurate valuation for their business, and then subtract the taxes and transaction costs involved from that amount. They will have to calculate how much of that money they would put into long-term investments such as stocks and bonds.
  2. Offer a quality retirement plan for employees: Now this is something that will help an entrepreneur attract and retain talented staff that can implement his/her vision. This is very significant for a serial entrepreneur who can then enjoy the freedom of going on to his/her next business idea. Companies that offer 401(k) plans with excellent support are the preferred places to work for most workers. Good retirement plans include:
    • SEP (Simplified Employee Pension) IRA
    • SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account)
    • 401(k) plan for employers with more than 10 employees.

    With a traditional 401(k) plan, members can save $18,500 per year ($24,500 for those 50 or older). Therefore, employers can consider offering additional plans such as:

    • Profit sharing plan that allows increased contributions to key employees, enabling them to save up to $55,000 per year or $61,000 for those aged 50 or older.
    • NQDC (Non-qualified deferred compensation) plans that allow executives of a financially sound business to defer compensation until retirement. This could reduce their tax burden and act as a strong incentive for executives to smoothly and prudently run their business.
    • Cash balance plans are ideal for employers that enjoy steady revenue. This type of plan allows enhanced tax benefits and higher contributions on behalf of key employees in exchange for lower wages.
  3. Zero coupon bonds: These bonds pay no interest until maturity (10 – 15 years after the purchase), and are unlike regular bonds that provide interest coupons twice a year. These bonds can be bought at deep discounts. At maturity, investors receive a lump sum amount equalling the initial investment and the interest over the life of the bond.
  4. Cash-balance pension plans: These are plans that allow entrepreneurs that enjoy high revenue to avoid some taxes while providing an extra benefit for their workers. Cash balance pension plans allow employees to save just as with a 401(k) plan, while allowing entrepreneurs to invest much more pre-tax income than a 401(k). For instance, as Stephen Dobrow, president of Burlingame, California-based Primark Benefits says, if an owner would normally pay $300,000 per year in taxes, he can put that amount into a cash balance plan – about $240,000 could go into the owner’s account and the rest could go to employees’ accounts.
  5. Business transfer:
    • Entrepreneurs planning to retire can consider selling their business to the highest bidder, saving on taxes. An entrepreneur could build the business for 5 – 10 years and choose to sell it will typically have to pay only capital gains tax on the stock (15 percent) as against regular income tax that could sometimes be as much as 50 percent.
    • Entrepreneurs could also consider setting up the business so that it continues to generate cash flow with minimal management required. You could build a commercial real estate business that would continue to provide you with an income during retirement via rental fees.
    • Transferring the company to family members is another option. In this case the business owner could receive a salary for life from the buyer. This is, however, not much encouraged by experts in the field.

As providers of medical record retrieval services for workers’ compensation lawyers, we keep abreast with various updates and developments in the employment and insurance sector. We understand how important it is for serial entrepreneurs to have a good retirement plan for their companies, and encourage their employees to make the most of that plan. They can save more than they think they will need, and thereby act as an example for their employees, inspiring them to do the same. Retirement security for serial entrepreneurs relies on proper planning. This would involve being aware of the possible retirement income sources, providing the right retirement plan for each of their businesses, and ensuring that their employees develop the culture of savings.

Disclaimer: The content in this blog should not be considered as professional advice on choosing a good retirement plan. It has been sourced from credible internet resources and is not the opinion of Managed Outsource Solutions (MOS). For professional or expert advice regarding choosing a good retirement plan, please contact a qualified attorney.

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