Small Businesses and the Arising Retirement Planning Crisis

Small businesses make up a large and important part of the US economy. According to the US Small Business Administration, 99.7 percent of employers are small businesses. That means if there is a retirement planning crisis, small businesses can definitely play a role in reversing the trend.

A recent study commissioned by Nationwide found that small businesses are often a strong advocate of retirement planning. 63% of surveyed small businesses agree that it is important for small businesses to provide retirement benefits. The reality, however, is not as optimistic. The same survey discovered that only 34 percent of small businesses are actually providing retirement benefits.

Small business owners often put their financial security at stake when starting a business. Even though they understand the importance of having a retirement plan in place, in most cases, it is difficult for them to do so. Often, large corporations have the economies of scale advantage and are able to keep the costs and fees low when it comes to retirement planning. Small business retirement plans, on the other hand, are often costlier to maintain.

Many small businesses are owner-only, and hence lack the resources needed to research and manage a proper retirement plan. The owners may have other priorities to keep the business off the ground.

Sense Financial recommends small business owners to at least look at the options available to them, including the IRA and Solo 401k options. Both retirement plans are designed for individuals, hence the plans are easy to maintain and cost little compared to traditional 401(k)s. Plan owners can take advantage of the tax benefits and save for retirement, without losing it all to expensive costs and fees.

With the Solo 401k, small business owners can also enjoy many other benefits. For those who need to catch up with their savings, the Solo 401k is a good solution with a generous contribution limit of up to $59,000 a year in 2016. The plan can be self-directed and self-administered, eliminating the custodial costs and management fees often seen with traditional plans. The loan option is also available, allowing plan owners to borrow up to $50,000 or 50% of their balance.

Another major benefit of a Solo 401k plan is that, plan owners can decide to go with the self-directing option and invest beyond the stock market. Many business owners are experts in their own fields. The self directed Solo 401k allows them to invest in real estate, private businesses, tax liens, and more. This presents plan owner the opportunity to be creative with their investments, leverage their own knowledge, and also to truly diversify their portfolio.

Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.

To learn more about Solo 401k, please visit sensefinancial.com.