Putting Aside Money for Retirement

Options abound, but start saving early to build long-term wealth

By Charles Dervarics, Writer/Editor

Like being your own boss? Then you should welcome the challenge of building your own retirement plan. Here's the good news: There are more options than ever – most with tax-friendly benefits – that can build long-term wealth.

To examine options for both you and your employees, try a three-part strategy:

Identify the savings plans best suited for your business.
Select an option that can minimize your tax liability.
Diversify your investments to maximize yields.

Step into SEP

A Simplified Employee Pension (SEP) is one of the most hassle-free retirement plans. Operating much like an Individual Retirement Account, it allows larger contributions and greater tax savings.
Try: Contact Merrill Lynch or Fidelity, two financial service companies that cater to needs of the self-employed.

Keep it SIMPLE

Business owners and their staffs both contribute to a Savings Incentive Match Plan for Employees (SIMPLE). This option is open to businesses with 100 or fewer employees who earn at least $5,000 in the previous year.
Try: Contact Morgan Stanley or Charles Schwab to learn about SIMPLE plans and compare them to other options.

Find a small business specialist

Some firms specialize in customized small business solutions, including pensions that match a small business owner's annual contributions to fluctuations in earned income.
Try: Compare MaxPlans and Vanguard deals for small business.

401(k)s: Choose carefully

Employees may contribute a percentage of their pay to 401(k) plans through payroll deductions. But employers need to consider the complexity of these plans when assessing retirement options.
Try: Contact Sharebuilder or Decimal Inc., both of which tout easy-to-administer 401(k) plans for small business.

Compare, compare, compare

Investment companies want your business, and using the Web saves time when comparison shopping.
Try: Go to BuyerZone.com to get quotes on 401k and IRA retirement plans.

Select a financial planner carefully. Professionals should develop specific plans and not promote only certain investments.
Communicate with employees. State your retirement goals clearly, and work with employees so they understand their options.
Start early. Don't wait until age 50 to start thinking about retirement.