Retirement saving strategies

Learn how you can save for retirement while maintaining the financial flexibility your business requires.


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Published: May 02, 2012


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Hi, I’m Tegan Jones for the Wells Fargo Business Insight Series. Today, we’re here to discuss a few simple tips business owners can use to help them save for retirement. I’m with Michele Grant, Director of IRA Products and Strategies for Wells Fargo. Thanks for joining me, Michele.


Thank you so much, Tegan.


To get started, I’d like to talk a little bit about the expectations business owners have when it comes to retirement. When do business owners plan to retire, and what are they doing to save?


Well, Tegan, actually, for all Americans, retirement is really a key planning strategy that they need to be paying particular attention to. Recently, we did a survey and found that 25 percent of middle class Americans say they’ll need to work until they’re at least 80 to live comfortably in retirement, so the topic is one that is definitely on the minds of all Americans. 

For business owners, currently, we’re finding that only about 18 percent of business owners have a 401(k) plan, and only 36 percent have an IRA account. Business owners with fewer than 10 employees continue to be less likely to own or contribute to a retirement plan. 

Interestingly enough, 80 percent of business owners expect that the sale of their business or operating profits from their business will be an important source of their retirement income. And that’s great, but that expectation may be a bit of a challenge, so business owners should definitely do some specific planning to address that point.


Right, I know that business owners can be a little wary of traditional retirement plans, because they don’t want to be tied to a set contribution every month. Do you have any tips for business owners who do want to save for retirement, but need a little more financial flexibility?


Well, you bring up a good point, Tegan. Flexibility is definitely something that is very, very important to business owners. The first thing is, for different plans, there’s a lot of flexibility in how much an owner can contribute, and how frequently they might want to contribute. So, one important thing to look at is what fits with that business, as far as when they want to contribute, and how frequently and often they want to contribute, and how much they plan on contributing overall. 

Another key point is there is a lot of flexibility in these plans, so it’s important, number one, just get started in the savings process. Plans have a lot of flexibility, so even if you choose a plan now and start contributing, there’s flexibility down the road, if you find that the needs of the business and the business owner actually change.


What if a business owner is trying to save for other long-term goals at the same time, such as sending a child to college or buying a house? How can they balance those priorities?


Well, that is a great point for folks to be really aware of, Tegan, as well. Both simplified employer plans — SEPs — and traditional and Roth IRAs offer a great deal of flexibility over just retirement savings. For example, SEP, traditional IRAs and Roth IRAs have exceptions that allow you to actually withdraw money for major life event situations, without incurring tax penalties. 

For example, all of these retirement plans have exceptions that would allow for an early withdrawal with no tax penalty when the withdrawal is used for higher education expenses, first time home purchases and even deductible medical expenses.


That’s great to know, especially for business owners who are just starting out.  But what about business owners who may be starting late? Do you have any tips for them?


Well, first and foremost, they really do want to review all the types of retirement plans, and look at what would work best for their business and the business owner themself, such as a 401(k) or a SEP or a SIMPLE plan. Each of those provide for higher contribution limits. 

What’s really important, of course, is for the business owner to sit down with their financial advisor and tax professional to really talk about what their individual needs are for their business, as well as for them individually, and come up with the retirement plan that provides the best solution to their needs.


So, the key is really successful planning. I think that’s the takeaway here.


That is exactly it, Tegan.


Michele, thanks so much for your time today. You’ve provided us with some really valuable insights.


Thank you.


And thank you for joining us for this segment of the Business Insight Series. To learn more about how Wells Fargo Business Banking can help you, visit In the meantime, we wish you continued success.