Don’t bank on your business to fund your retirement

Retirement can loom like a dark cloud for small-business owners. Many invest blood, sweat and tears — and every penny — into building their business but never set cash aside for the future.

A huge number of entrepreneurs have reported putting aside no retirement savings at all. For some, selling the business is their only retirement plan.

That’s a risky bet, says Keith Hall, president and chief executive officer of the National Association for the Self-Employed.

“You’re putting all of your eggs in one basket. Not just your current lifestyle, but your future,” Hall says. “If something goes wrong, you sacrifice both.”

And the list of things that could go wrong is long: Your business could fail. Your health could fail. You may not find a buyer. You may have to sell for less than you need. You may not be able to retire fully.

Rather than gamble on everything going right, diversify your nest egg so it will last you well into your later years.

MAKE RETIREMENT PLANNING A PRIORITY

Saving for retirement is often the last item on your budget and the first to get cut in favor of other priorities, Hall says. Instead, make it as important as paying your mortgage or running your business.

This won’t come naturally to most entrepreneurs, who are often hyper-focused on immediate needs and tend to plan in three- to five-year increments.

“It’s hard as an entrepreneur and small-business owner to think 20-plus years out,” says Mary Bell Carlson , owner of Carlson Consulting LLC. “I’m often figuring out what I need to do today for immediate cash and long-term profitability.”

But Carlson, a financial counselor and certified financial planner, makes a point to invest where she can. She and her husband contribute to his employer-provided...