Running a business can come with long hours, personal sacrifices and major rewards. And when it comes to retirement planning, many business owners put themselves last—too busy reinvesting in their company or managing everyday operations to focus on their financial future.
That’s a problem. Unlike traditional employees, business owners typically don’t have access to employer-matched 401(k)s or pension plans. You are the employer, and your business may even be your retirement plan. The stakes are higher, and the strategy needs to be smarter.
Here’s how business owners can plan for a secure retirement while also protecting the legacy they’ve built.
1. Understand the Unique Challenges Business Owners Face
Business owners don’t have a built-in road map to retirement. Their situation is fundamentally different from that of a salaried employee, which creates unique planning hurdles:
- Personal and professional finances are deeply connected. You may have reinvested profits into the company instead of building a personal nest egg, making it harder to separate business finances from your retirement security.
- Is the business your retirement plan—or just part of it? It’s risky to assume your business will fund your entire retirement. Markets shift, buyers back out and valuations fall short of expectations. Diversification is key.
- There are no built-in retirement benefits. Traditional employees often benefit from automatic payroll deductions into retirement accounts and employer matching. Business owners have to create their own savings plans—and follow through on them.
- Succession and retirement go hand in hand. Planning your exit from the business—whether through sale, transition or closure—needs to happen well before your planned retirement date. A smooth exit takes time and careful strategy.
2. Assess Your Current Financial Position
Before you can plan for retirement, you need a clear, honest snapshot of where you stand—personally and professionally.
Start with this checklist:
- Review your personal savings and investments. This includes traditional and Roth IRAs, brokerage accounts, high yield savings accounts and any passive income sources like rental properties.
- Estimate the value of your business. This is often the largest (and most illiquid) asset you own. Work with a valuation expert to get a realistic figure.
- List debts and liabilities. Include both personal debt (e.g., mortgages, credit cards) and business-related obligations (e.g., loans, lines of credit, vendor contracts).
Once you’ve got your numbers, it’s time to ask the hard questions:
- Can your business continue to earn revenue without your day-to-day involvement?
- Will you need to sell the business to retire—or is it just a bonus if it sells?
- What happens if you face an unexpected health event or need to step back sooner than planned?
This isn’t about doomsday thinking; it’s about building flexibility into your future. The more honest you are now, the smoother the ride later.
3. Set Clear Retirement Goals
Clarity is power when it comes to retirement planning. The more detailed your goals, the more accurate your plan.
- Define your lifestyle. Will you travel extensively? Relocate? Continue working part time? Retire early or late? Your lifestyle choices determine your retirement budget.
- Estimate your expenses. Create a rough monthly and annual budget that includes housing, food, healthcare, insurance, travel, leisure and family support.
- Set your timeline. Choose a target retirement age and work backwards to determine how much you need to save each year to meet your goal.
- Account for longevity. Today’s retirees may spend 30+ years in retirement. Plan for inflation, health issues and the possibility of outliving your initial savings estimate.
4. Diversify Your Retirement Savings
Too many business owners have all their eggs in their company basket. Diversifying your savings helps mitigate risk and creates multiple income streams.
- Don’t rely solely on your business. Your company’s value can fluctuate, and a sale may not happen as planned. Separate personal savings are critical.
- Use tax-advantaged retirement accounts. SEP IRAs, solo 401(k)s and SIMPLE IRAs offer excellent opportunities to build wealth.
- Max out your contributions annually. Take advantage of tax deferral and compound growth by contributing the maximum allowed by the IRS each year.
- Look at nontraditional options. Real estate investments, annuities or taxable brokerage accounts can supplement retirement income and help diversify your portfolio.
5. Build an Exit Strategy for Your Business
A good exit strategy turns your business from a job into a retirement asset. Without a strategy, you’re not retiring—you’re just stepping back and hoping things don’t fall apart. Here’s how to build a plan that actually works:
- Create a succession plan. Whether you want to hand the reins to a family member, long-time employee or third-party buyer, your successor needs mentoring and time to transition.
- Get a formal valuation. This helps establish a baseline for your retirement projections and provides clarity if you plan to sell, merge or divide equity.
- Explore phased retirement. You don’t have to leave all at once. Many business owners reduce their hours or take on an advisory role while gradually transferring responsibilities.
6. Consult Financial and Legal Experts
You built your business with advice from pros; retirement should be no different. Retirement deserves the same level of strategic support.
Think of financial and legal experts as your retirement pit crew. They can help you fine-tune your plan, avoid disasters and make sure you’re not leaving money (or opportunities) on the table.
- Work with a financial planner. Choose someone who understands both personal finance and business ownership.
- Hire a tax advisor. Selling a business can have complex tax consequences. A pro can help you structure the sale strategically.
- Engage a business lawyer. Legal expertise ensures all agreements, contracts and estate planning documents are rock solid.
READ MORE: What Is a Financial Advisor and What Do They Do?
7. Prepare for the Emotional Transition
Retirement isn’t just about money. For many business owners, it’s about leaving behind a part of their identity. Here’s how to navigate the emotional terrain:
- Who are you without the title? You’ve likely defined yourself as a business owner for years. Letting go can be emotionally difficult.
- Find a sense of purpose. Whether through hobbies, volunteer work, travel or mentorship, plan for how you’ll stay active, fulfilled and connected.
- Stay involved—on your terms. If stepping away entirely feels too abrupt, look for ways to remain connected to the business without being tied to the day to day.
8. Start These Actionable Steps Today
You don’t need a full blueprint to begin planning your retirement. These simple steps can get the ball rolling:
- Open a retirement savings account tailored to your business structure. Whether it’s a SEP IRA, solo 401(k) or SIMPLE IRA, choosing the right plan depends on your income, number of employees and contribution goals. Start by comparing account types, then set up automatic contributions. Even small amounts can build momentum.
- Automate contributions from your business income to personal retirement accounts. Don't rely on discipline; rely on systems. Set it and semi-forget it. Make saving a nonnegotiable business expense.
- Schedule a consultation with a financial advisor to review your goals and strategy—someone who understands both personal retirement and business exit strategies. Come with questions, leave with a plan.
- Draft or revisit your succession plan. Who steps in if you step out? Whether it’s a family member, partner or key employee, clarity now prevents chaos later.
- Start the conversation—with the right people. Your spouse. Your business partners. Your team. Retirement isn’t a solo act; it’s a transition that impacts everyone around you. Bring them into the loop early.
Own Your Exit: Build the Retirement You Deserve
Retirement planning for business owners is more complex, but also more customizable.
There’s no corporate benefits package waiting for you. No built-in exit ramp. It’s up to you to build the road to retirement. That means being intentional: separating business and personal finances, diversifying your savings, building a succession plan and leaning on professional advice.
The upside? You get to design your exit. Start now. Your future self—and your future business—will thank you.
READ MORE: Dreaming About Starting Your First Business? Here’s How
