Smart Retirement Planning Tips for the Savvy Business Owner

Smart Retirement Planning Tips for the Savvy Business Owner

Understandably many business owners are focused on “just getting through the year” right now, while others are thriving, pivoting, and looking only forward to maximize growth from new opportunities. A successful or savvy business owner is always thinking, “What’s next?” It could be as simple as what’s the next opportunity, or what’s the next challenge? After all, it’s been that kind of year!

But the biggest questions like, “What’s next for me? Is retirement an option?” are those that only the smartest, most successful business owners ask of themselves and their financial advisors.

Do you have a business retirement plan?

Creating a comprehensive retirement plan for business owners requires a careful understanding of the unique characteristics of the individual’s needs and goals, their family dynamics, the size, and type of business they operate, and the amount of time prior to retirement.

Some businesses are set up to expand and hire more employees, while others have little desire to expand beyond the owner and family members.

Finally, some businesses are sellable and are designed to provide the owner with a substantial portion of their retirement funding needs, while others are primarily set up to generate regular income throughout the owner’s working life. In the latter situation, the owner is less inclined to depend on the sale of their business to adequately satisfy their financial needs for retirement.

What factors should I consider?

The following are important considerations in the development of a solid, well-designed retirement plan to meet the needs of business owners:

  • The size of the business and the number of employees can make some retirement programs undesirable, while others can create a substantial amount of tax-deferred or even tax-free income at retirement. For example, a 401k may be suited to a business that has many employees, while a simple IRA would be better suited to a business with few employees.
  • The composition of a closely-held business can provide opportunities not practical or cost effective for owners of a larger business with many employees. For example, the implementation of a Defined Benefit plan can allow the participants to set aside significantly larger amounts of pre-tax contributions that will lower the business owner’s and the business’s taxes. The inability to limit inclusion of the plan for a business with many employees would make the costs prohibitive and dwarf the tax benefits.
  • How a business is legally constructed can create both retirement plan benefits, as well as estate planning benefits. For example, a family partnership can allow a business owner to create a private annuity sale, allowing the owner in the family partnership to transfer business ownership without estate tax credit limitations and selling the business over an extended period of time to reduce annual income taxes.
  • The type of business, and the industry it is a part of, can be instrumental in determining whether a business is sellable and if it will be able to provide the owner with a sizable portion of their retirement funding. For example, owning a local sandwich shop or delicatessen may provide the owner with adequate income during their working years. But the owner is unlikely to depend on the sale of their store to provide them with sufficient funds for retirement. Whereas, the owner of a mid-size plumbing business has a much better chance of achieving a higher percentage of their retirement funding from the sale of their business.
  • The length of time a business owner has prior to retirement can either restrict or allow for a wider number of retirement planning options. A younger business owner in reasonably good health might chose to look at cash value life insurance policies to build tax-free distribution later, instead of tax-deferred income. Additionally, tax considerations at the time of retirement can play a significant role. Tax-deferred income once distributed becomes taxable and can push the taxpayer into a higher tax bracket, whereas tax-free income avoids that problem.

There is lots more to discuss…

Obviously, this list is a very limited discussion of all of the options available. Your goal should be to strategically create a business retirement plan that minimizes taxes, takes advantage of various aspects of the business, the ownership structure, size, and scope of the business, as well as build-in succession and exit planning strategies.

That’s what we work towards with our business owner clients – we call it developing a Business Owner Master Plan. In fact, we’ve written a 17-page white paper about creating such a plan – give us a call at 480-346-1283 and we will email you a PDF.

Finally, your business retirement plan, and your Master Plan if you go that route, must be adaptable to changing circumstances, such as tax rules, economic conditions, technological innovations, family circumstances, owner health, change in time, and emerging opportunities. Remember retirement planning is an ever-changing, on-going activity the requires constant vigilance and maintenance…that’s why we meet with our clients three times a year…not just once.

Contact us

Our passion is helping business owners make their success their legacy. We specialize in working with business owners to create integrated financial plans for your personal life and your business; essentially organizing your complete financial life in one place.

Please reach out to us at 480-346-1283, or email if you have any questions, or just want to discuss further.

Covid-19 & the Current State of the Economy

Covid-19 & the Current State of the Economy

By John Hebert, CPM® CFP®

This morning, like most mornings, I got up, made myself a cup of coffee and turned on the business news. The commentator “buzz” was centered entirely on the upcoming Department of Labor jobs report for July. The estimated number was expected to be around 1.5 million new jobs added from June, as nervous analysts scrambled to come up with a narrative to explain anticipated disappointing numbers. Then the host cut off the conversation and turned to the reporter waiting to relay the results; the numbers flashed 1.763 million new jobs!

This pandemic has had an extraordinary impact, but it has unfolded like no other. At no other time in American history has the government sought to shutdown large swaths of the economy. The Spanish Flu of 1918 killed more than 675,000 Americans, and yet only a few towns shut down. Then came the Hong Kong Flu in 1968 which was estimated to have killed over 100,000 people in U.S., with little or no economic shutdown. Hence shutting down the economy was a shot in the dark.

As I write, we are now ending the first week in August and we know quite a bit more. GDP fell 3.4% in the first quarter and fell 9.5% in the second quarter (annualized rates were 5% and 32.9% respectively). All expectations are that the third quarter will show a substantial upside bounce.

The overall unemployment rate peaked in April at 14.7% and has fallen to 10.2% in July, reflecting a third monthly decrease in a row. Forecasts are that the unemployment rate is likely to fall consistently for the remainder of the year, but at a slower pace.

Continued improvement will depend on where and how quickly the economy opens up, as well as success in lowering the virus mortality rates. The overall consensus is that as every month goes by, more parts of the economy will re-open going forward. In total about 22.2 million people became unemployed during the March / April peak, and as of now over 9.3 million are back to work. This represents about a 42% re-employment level, and despite the wave of infections is the southwest, the re-employment effort continued.

Interestingly, the re-employment rates could significantly intensify in August, September and October as federal unemployment benefits expired at the end of July. Currently, the fourth stimulus bill is stalled in Congress. At issue, the federal benefit of $600 per week is thought to discourage many workers from re-entering the labor force since unemployment benefits exceed their employment income. Now those who have jobs waiting for them will likely return, and once that happens, in September and October we’ll get a clear picture of the long-term unemployment problem.

Now that the effects of COVID are clear; school re-openings, unemployment benefit levels, continued low interest rates, a potential executive order for a payroll tax holiday, as well as a vaccine and new treatments, will unquestionably determine the rate of re-employment and economic growth for the next six to twelve months. Oh, and by the way, in case you’d forgotten, there’s an election in less than three months!

What does this mean for the business owner? Our view at Modernize Wealth is that an extension of the Payment Protection Program, if there is one, will be more targeted towards smaller businesses, or focus on the most severely damaged industries. Additionally, the additional federal unemployment benefits, once negotiated, will likely settle in the 70% range, when you add the state and federal supplemental payment, of the individual workers’ prior employment salary to create a strong incentive to return to work.

We may quite possibly see an employer payroll tax holiday by use of Executive Order, though the constitutionality will be fought in the courts. The Fed has pretty much stated that Fed rates will stay at or near 0% until 2024, provided there isn’t an unforeseen uptick in the rate of inflation which is a serious log-term concern.

Finally, no deal will be struck by the Administration and the Senate with the House without liability protection for business against frivolous lawsuits related to COVID. Other parts of a stimulus bill will be geared towards state and local governments, while most of the rest of the House bill are unlikely to survive. Be forewarned; the is no guarantee that a deal will be reached, so plan accordingly.

COVID-19 has impacted all aspects of the global economy over the past several months.
Take the first step in minimizing the long-term financial impact on your personal and/or business finances by
downloading this must-have checklist outlining the steps you can take today to help insulate your own financial plans.

If you’d like more discussion, please feel free to reach out to me by email at, call the office at 480.346.1283. I encourage you to check out our News section; it  has lots of useful resources, videos, and information for business owners.

About the Author

Modernize Wealth specializes in working with business owners to create integrated personal/business financial plans, innovative investment solutions, and planning strategies. John Herbert’s financial industry gravitas comes from almost 30 years’ as a Certified Financial Planner and Certified Portfolio Manager. An accomplished educator, John taught Economics at Chapman University and the University of Phoenix for many years.

Knowing the Value of Your Business

If you have questions, or would like to discuss this further, we would love to hear from you; please email or call us at 480.346.1283.

What should be in your Disaster Plan

If you have questions, or would like to discuss this further, we would love to hear from you; please email or call us at 480.346.1283.

An IRA Can Help You Make Your Success Your Legacy.

An IRA Can Help You Make Your Success Your Legacy.

Did you know that Individual Retirement Accounts (IRAs) can play a valuable role in the estate planning process? We will get into some tips and strategies shortly, but let’s quickly recap what you already know… (more…)

Understanding a Recession

Understanding a Recession

Did you know there are three types of recession? Modernize Wealth Chief Investment Officer John Hebert CPM® CFP® explains the different types of recessions that can occur in an economy, and how they can affect you. John also discusses the current situation caused by the Coronavirus, what kind of recession it is likely to cause, and what the recovery prospects are based on history.

Modernize Wealth – A Modern Approach to Wealth Building & Legacy Creation

Modernize Wealth – A Modern Approach to Wealth Building & Legacy Creation

When we sat down as a family and chose to name our firm Modernize Wealth, we did so with a clear perspective: to provide our clients with an exceptional wealth management experience that integrates your personal and business wealth management strategies to create a legacy for you and your family. Our goal is to be invested in your legacy, by offering you a truly innovative approach that is relatable, and evolves as you succeed.

We start by helping you develop a vision of where you would like to be in the future, and designing a financial plan to allow you to achieve your objectives for both your business and your family. We leave no stone unturned; we explore how to help you build your business, we work with you to design a financial plan to build real wealth, and to provide an exit strategy tailored to your goals.

As a family business ourselves, we are passionate about creating a legacy of wealth for future generations – to stand on your shoulders and lead meaningful, purpose-driven lives.

>Our innovated approach extends to all aspects: we sought to implement more advanced investment strategies, state-of-the-art financial planning tools, and creative risk management strategies to build, track and protect your family’s wealth legacy.

Let’s face it: bull and bear markets don’t last forever, and you need a strategy to cope with both types of markets. It isn’t enough to just gut it out when markets go south; you will need a strategy in place before the market plunges so you can take advantage of opportunities when others are panicking. It’s also critical to remember that bull markets come to an end; how you react will be based on whether or not you have a strategy in place to act in a rational manner when adversity sets in.

Our financial planning is built not just on your personal finances, but your business finances as well. We help you determine what your business value currently looks like in the market, and help you construct a plan to grow the value of the business so you can use it to create your legacy any way you see fit, based on your objectives and values.

Our families are the most important people in our lives. We spend our lives providing and caring for our families; we strive to provide the very best education for our children and instill our values so they can fulfill their dreams in life. As a family business, we recognize this and we have built our wealth management based upon this dream.

That is who we at Modernize Wealth are, and you are who we serve. Please reach out to us at 480.346.1283 or email if you have any questions, or just want to discuss further.

Four Investment Concepts for Volatility

Four Investment Concepts for Volatility

What can you do in times of volatility to make sure your financial investments stay in line with your goals? Brandon Hebert,  CPWA®, CEPA®, CEO of Modernize Wealth, presents four quick tips to help you figure out where to start when it comes to evaluating your investments. If it’s been a while since you did an investment evaluation, especially given the long bull market we’ve just experienced, take a couple of minutes to watch this.

If you have any questions or want to talk about your investments and your financial goals, call us on 480.346.1283 or email

What’s Really New?

By John M Hebert CPM® CFP®
What’s Really New?

The benefit of having been around for over 40 years in the financial world is that it becomes easier to realize that, while the COVID-19 pandemic is a new problem, it has many of the same features as other periods of crisis. The dance steps are as follows: problem appears, problem gets worse, crisis is declared, markets tank governments and private businesses search for solutions, eventually solutions begin to surface, markets snap back, and things slowly begin to return to normal albeit with a new normal.

My first brush with this phenomenon occurred in high school with the original energy crisis and Watergate. This started with our support of Israel in the six-day war, the ensuing Arab oil embargo, the rapid rise in oil prices, the 50% drop in the Dow, Gasoline rationing, energy efficient cars from Japan (owned one), the market recovered by 1976 and a returned to a new normal.

I invite you to look back over the last 50 years or longer to prior periods of crisis and look at the progression of events for each. Did you notice they all follow the same steps? Up till this week, from the middle of February to the beginning of this week, we have completed the following steps: problem appears, problem gets worse, a crisis is declared, market tanks, governments and private businesses search for solutions, eventually solutions begin to surface, and as of this writing markets begin to snap back.

Government solutions are often very clumsy, disjointed and rife with the potential for abuse and corruption. Private business by and large will invariably be more efficient create products or services that will alleviate the pain of the existing problems and produce goods and services to create a better living situation of all of us. As the Fed literally fired every bullet in its’ arsenal, and the Federal government has created a spending bill that would make sow blush, surely at some point there will be a different problem to reckon with.

As for now, due to technological innovation and the rapid response from government has been as quick as I have ever seen it. We do learn as a society about the dangers of wasteful delays, therefore it may very well be the case that as quickly as the markets fell and the response to the virus was implemented, the recovery for both market and public health will be quicker than anybody is currently anticipating.

Now, all eyes are on the progression of the disease. As soon as we see the curves for new cases and death rates flatten, markets will smoke out the timetable for a return to normal albeit a new normal. The President has indicated that Easter is a target date for beginning to open up the economy. It’s widely recognized that opening up the economy too early may invite a relapse of the crisis. I suspect that Easter is more likely to be a time where a plan will be put in place to carefully and selectively reopen the country for business over a period of time with benchmarks to reflect improving health conditions.  As the disease is brought under control and the economy reopens the market will complete its recovery.

Please reach out to us at 480.346.1282 or if you have questions or just want to discuss further.