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Will your business-owner client have enough in retirement?
The statistics regarding Americans' preparedness for retirement can be unnerving, especially when it comes to small business owners. Retirement account ownership, contribution, and participation rates for small business owners are low — only 18% participate in a 401(k)/Thrift plan, less than 2% own a Keogh plan, and only about 36% own an IRA (and of those individuals, only 33% actually contributed to the IRA). Moreover, self-employed individuals are less likely to hold a retirement account as compared to those who are wage-and-salary workers.
Cash value life insurance may help business owners by providing a tax-advantaged source of supplemental retirement income on top of death benefit protection. Some of the benefits using life insurance as part of an overall retirement strategy include potential tax advantages, potential creditor protection, flexibility and the possible potential to help offset the costs of long-term care by adding applicable riders to their policy. Life insurance may also be a great tool to help assist business owners with their estate planning, including how to equalize an estate when one child inherits the business but another doesn’t.
To the right are materials with practical, actionable advice on how to help business owners plan for their retirement.
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