© 2020 Arizent. All rights reserved.

Clients can save for retirement while running a business. Here’s how

laptop computer work Bloomberg 8/13/19
Register now

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

Clients can save for retirement while running a business. Here’s how
To build their savings, clients who run their own businesses are advised to hold a variety of investments in their portfolios, as diversification provides steady investment growth over time, according to this article in Entrepreneur. It is also important for business owners to have an exit strategy and to take control over their debt. Saving in one-participant 401(k)s and SEP IRAs are also recommended, as these accounts offer tax benefits that can boost their savings and improve their bottom line.

One option for guaranteed income if clients are delaying Social Security
Older clients who intend to delay Social Security have the option of using their savings to buy a single-premium immediate annuity, a strategy that will delay their source of guaranteed income while waiting for their retirement benefits, according to this CNBC article. However, clients are advised to study this option carefully before making a decision. Making the wrong choice could mean not having enough funds to cover emergency expenses in retirement, according to the article. Moreover, payouts will be treated as taxable income, especially if pretax money in retirement accounts was used to purchase the annuity.

Why clients should consider a retirement checkup
Clients are advised to review their retirement portfolio, as they could end up with less than what they have as a result of taxes and inflation, according to this article in Kiplinger. They may need to boost their stock allocation to improve their returns. “Your first inclination in retirement is to become more conservative, so chances are you don’t have as much money in stocks as you should. That could be 30% to 40% rather than 10%.”

In what was a stellar year for corporates, governments nearly missed the list entirely.
January 8

A little-known retirement saving strategy for clients to consider
Clients should consider high cash value, dividend-paying whole life insurance policy as part of their retirement savings plan because of the various benefits that this option provides, according to this Motley Fool article. This type of policy offers guaranteed, predictable annual growth, liquidity and continued compounded growth. A high cash value, dividend-paying life insurance policy is also subject to multi-layer safety regulations, affords clients greater control over assets and provides tax benefits, such as tax-deferred growth and tax-free withdrawals, according to the article.

For reprint and licensing requests for this article, click here.