When Americans are asked to give their opinions on politicians in Washington, the results are fairly typical from one pall to the next. By and large, they feel that their elected senators and representatives could do better jobs, focusing more on compromise than scoring political points. In short, Americans believe legislators must take working on behalf of the people more seriously.
With the 116th session of Congress now underway, retirement security is something that Capitol Hill seems to be addressing with their constituents in mind, with the House Ways and Means Committee hosting a hearing on how to improve retirement security for today's workers.
In a statement, Insured Retirement Institute President and CEO Wayne Chopus thanked legislators for addressing this issue with the Congressional session still in its infancy.
"The House Ways and Means Committee today is taking the first step in the new Congress to address the looming retirement crisis facing America," Chopus said. "Americans are not sufficiently saving for retirement often because they lack access to a workplace retirement program or lack retirement plan options to better protect and preserve those savings to last throughout their retirement year."
In other words, small-business owners – like lawmakers – could be doing better jobs. Not only do many businesses not have retirement plans available for their workers, owners often don't have them for themselves either. In fact, a substantial percentage of small-businesses owners have no intentions of exiting the workforce whatsoever, with more than half – 53 percent – stating as much in a 2017 Gallup poll.
"The average age in which most people plan on retiring is 66."
Americans' views on retirement run the gamut
Retirement is a tricky subject, both for consumers as well as business owners.
Thanks in part to people taking better care of themselves physically – by exercising, eating right and advancements in health care – many of the people who planned on leaving the workforce at some point are reconsidering.
Look at other polls, however, and it's often a case of the more things change, the more they stay the same. For example, in a 2018 survey also done by Gallup, the average age at which respondents said they planned on retiring was 66. That's virtually unchanged compared to a similar poll done in 2008 and up just a year from 2006.
Here's something else that hasn't changed altogether much: retirement literacy.
Routinely, Americans overestimate their comprehension. Indeed, according to a 2017 analysis conducted by the American College of Financial Services, 3 in 4 respondents received 'F' letter grades on quizzes that examined their retirement income understanding. You can imagine the surprise, when a majority of these same individuals thought their grasp of retirement preparation was above average.
This isn't to suggest that Americans – business owners, in particular – aren't setting money aside should they decide to call it quits from their careers. Sixty-six percent of small-business owners, in a study conducted by Manta, said they had a retirement savings plan in place and two-thirds also stated they had succession plans set up.
Despite these protections, saving for retirement and actually achieving retirement security are two separate things entirely. Wealth management experts advise clients to have at least 10 times their current income set aside.
If you're a small-business owner who is just starting out – or have long been working for yourself and want to improve your financial security – here are a few tips that can help you better prepare for your post-career years:
"Few establish a secure retirement plan all on their own."
Go to the experts
The first step to firming up your savings is to recognize where you may be lacking, in terms of retirement literacy or actual dollars and cents. If you can't identify these areas of improvement, a financial advisor can. As noted by Business News Daily, there aren't too many people who establish a secure retirement plan all on their own. They go to the experts for advice.
"A financial advisor – from any financial institution, including your local bank – can help you take the next step with a retirement plan, and a plan provider can walk you through the various plans available and help you identify the most financially viable and ultimately beneficial retirement option for you," said Paul Davidson, director of human resources at Paychex.
Financial advisors have connections, so if they can't help you, they likely know the people or providers who can.
Plan for the unexpected
Your fellow business owners will likely be the first to tell you that what you planned on happening frequently doesn't bear itself out. That's why you should have contingency plans in place. Ideally, according to Davidson, retirement savings should derive from several different vehicles, such as Roth or traditional IRAs, 401(k)s and Social Security.
Consider life insurance premium financing
When you have money tied up in other uses, it can be difficult to come up with funds for retirement planning purposes. That's where life insurance premium financing can come into play. Whether it's money for business continuity, income creation, buy-sell funding or other retirement planning purposes, life insurance premium financing puts borrowed funds to work in a cost-effective manner.
Learn this and much more about Leveraged Planning® Solutions by contacting a Global Financial Distributors advisor today.