4 Common Retirement Planning Mistakes

For many small business owners, the road to retirement includes its share of potholes. Seasoned advisors Rick Miller and John Brown urge pizzeria owners to avoid these frequent missteps:

Mistake #1: Failure to set a retirement budget. It’s virtually impossible to build a sound retirement plan without thoughtfully estimating retirement expenses, Miller says. Setting a budget helps owners understand the assets they will need to accumulate for their retirement cash-flow plan.

Mistake #2: Not paying enough self-employment/FICA taxes to have any material Social Security benefit. Social Security can be a steady supplement to one’s retirement income, Miller reminds. Capturing such benefits, however, requires an ongoing investment throughout one’s working years.

Mistake #3: Thinking the biz must be sold. Part of the hedge in establishing a differentiated business with capable management and proven systems is that the eatery can thrive beyond the owner. Brown reminds that retaining ownership and incentivizing management with a profit-sharing arrangement is another potential retirement path.

Mistake #4: Counting solely on the company’s sale to fund retirement. The pool of potential restaurant buyers isn’t deep, Brown says, and many prospects won’t have much more to offer than a small down payment and a promissory note, which isn’t enough to fund a comfortable retirement, especially if the pizzeria’s performance heads downhill.