The New Retirement Attitude - Today's 60 is Yesterday's 40

If I say "retirement," what are the first five words that come to your mind? If they are "leisure," "relaxation," "comfort," "golf" and "old age," you're thinking about yesterday's retirement. This is the 21st century, when the new 60 looks like the old 40. And when retiring means "growth," "new opportunities," "excitement," "challenge," and "self-discovery."
Look on the bright side. When you retire, you have more time to pursue your passions. That's what Harry did. He was an on-air personality in the Midwest for most of his working life. When he retired, he moved to Sedona, AZ, where he had sought refuge during the years when the hectic pace of his life left him exhausted.
For the first couple of years, he played tennis and read. But soon he got bored, so he turned to photography -- an early love abandoned when he got his first big job. Before long his photos were published. Then he started a small greeting card company. He didn't need the money, so he donated the proceeds to a local arts program for teenagers. Then he put the two together and his greeting-card company offered exciting intern programs for aspiring artists. Harry still plays tennis three times a week, but he isn't bored any more.
Photography and tennis may not be your thing. But I'm certain there's something out there that will get you engaged. The new retirement is about personal growth. It's a chance to mend fences, heal old wounds, and really get to know you. Since you have more time, take up journaling. Indulge in the luxury of going deep -- and understanding your life, your relationships, and your lifetime motivations. Keep a "Gratitude Book" and write down the things you're thankful for -- the large and the small.
Dr. George E. Vaillant, author of Aging Well, a book that chronicles three studies of 824 people followed from their teens into their 80s, found that a capacity for gratitude is a major factor in successful aging. Practicing an attitude of gratitude can be done any time of day, but try it just before you go to sleep each night. Review the day and notice all the things you're thankful for from the rose bush that finally has a bloom to your third grandchild -- a girl at last.
Grow your mind, too. Learn new things by taking classes at your local community college or travel with Elder Hostel to study the Impressionist painters in France. In the "old" retirement you'd hang out with the same friends -- the threesome on the golf course or the regular Monday night bridge game with the couple you've known for 30 years. You'd design your life around the same activities day in and day out. Studies have actually proven that getting stuck in deadening routines can be dangerous to your health. Instead, meet new people. Do something novel you couldn't imagine doing even a few years ago.
Marcia had lived a very diverse life. An actress and a trained chef, she had played off Broadway and been a pastry chef on a Caribbean yacht. Her life's dream was to own a country inn, and she found the perfect place on the rugged Oregon coast when she was in her mid-fifties. But after 10 years of working 24x7 to meet the public's demands, she was ready to retire.
She started a small catering business, but that was more of the same. She craved a whole new world. So she said "yes" enthusiastically when a friend suggested she work a few days in a day-care center. Being with the young children nurtures her creative side on a regular basis, and getting to know the parents has enriched her life and expanded her universe. She falls into bed exhausted at the end of her days with the kids, but she's inspired and gratified, too.
Bottom line -- Cast off society's belief about aging and retirement. Retirement can be the adventure of a lifetime. It doesn't have to be a permanent rest stop.
Ask yourself whether your negative beliefs about retirement are getting in the way of how you really want to live the "third half" of your life. What one belief about retirement will you change today?

Retirees Feel Economic Crunch More Than Most

We are living longer and we have work and money options available to us that were unheard of when our parents and grandparents were planning for their "golden years." However, as some of the first baby boomers begin to consider retirement, the current financial crisis has many worried that their well-laid plans will be ruined. You should not be surprised to learn that retirees have been hit particularly hard our country's recent economic problems, and The New York Times featured these real concerns on its front page.
Quite a few senior citizens rely largely on dividends from stock investments to pay for their daily living. These men and women do not have time for the markets to rebound and they are having to sell stocks at a loss just to pay for expenses or, at the very least, they are scaling back their future plans. As Alicia H. Munnell, director of the Center for Retirement Research at Boston College said, "If you're 45 and the market goes down, it bothers you, but it comes back. But if you're retired or about to retire, you might have to sell your assets before they have a chance to recover."
It is not only those with stocks who are feeling the strain. Property taxes are going up as local communities try to compensate for reduced funding from the state and federal government. People who have paid for their home and lived there for decades are now struggling with the expense of living there.
Gas prices are affecting retirees beyond just the lack of freedom to travel as often as they would like. Increased costs for fuel are raising food prices as well as the availability of volunteer programs such as Meals on Wheels. To seniors on a fixed income, these changes are significant and nerve-wracking.
You can achieve financial happiness even in these difficult times. You must stay informed and up-to-date. Make managing your money as important as earning your money in the first place. No one has more to gain than you do - no one has less conflict of interest, in the management of your money, than you.



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What's on the Menu When it Comes to Your Pension Annuity?

Although the idea of facing a number of different options when it comes to your pension annuity may seem alien to some, it is an important issue as what you decide to do with your fund can influence how you spend your later years. Get it wrong, and you may end up with less of an income than you wanted. Get it right, and you may get the rest you deserve in complete peace of mind.
For those not in the know, you can currently turn the pension fund which you have been saving into an annuity option at the age of 50 at the earliest. Many people will decide to do something a lot later than this, but nonetheless you need to make a decision in time. There are many things you can do when the time comes to make your choice, and there are more options available than many people realise.
The entire pot of money you have put into a pension fund while working is not untouchable. You may decide to take what is known as tax-free cash. Quite simply this is a slice of the fund tax-free which you can then spend as you wish, but some of it will need to be left behind and turned into an annuity. This is where your options expand further.
In most cases whoever has been administering your fund will offer you a pension annuity deal, essentially turning your fund into a method of income for the rest of your life. But this is not the only option and you are free to shop around a number of different providers who may offer different packages at different values. Your right to take this route is known as the open market option or OMO, and fund providers are obliged to advise you of it and ensure you understand that other companies and annuity deals are available.
The open market option is something which was created by law and means you can shop around a number of providers. Some may offer you a lower income than others for a shorter period meaning there is competition for your cash. And some deals will be better than others. For example, one company might be able to offer you £9,000 a year for the rest of your life if you had a £100,000 fund. But another provider might be able to provide you with a £10,000 a year income for the rest of your life from the same fund.
Impartial financial advice is always a good idea when selecting a pension annuity as many different products are linked to investments and other variables. These are sometimes favoured by people who have other resources such as savings to fall back on if their investment doesn't work out. There are also impaired or enhanced annuities which supply potentially superior incomes to people who have a reduced life expectancy due to health reasons. Whatever your situation, the annuity market may be broader than you first thought, all you have to do is choose the right way for you.

The Benefits of Retirement Planning and Why it is Very Important

Obviously, you plan on retiring at some point. The question is in what manner do you wish to retire: forced or planned? By making that decision early on, you can plan accordingly.
Far too many people decide on "forced". Although it's the far easier choice, this means that you will be limited to social security's benefits in your advanced years, or becoming a burden on your family. Either option is not an entirely pleasant one, and could have been avoided just by making some basic plans when you were a bit younger. Admittedly many people have no real choice in this (the whims of fate can affect anyone, no matter how prepared), it's nonetheless a choice that is made. More accurately, it's a choice of omission; the person doesn't really bother to make a choice and simply goes along with whatever happens. Sometimes it's far easier to go with the river than to force it the way you want it.
However difficult it may be to force the river to change direction, the direction needs to be changed. Decisions need to be actually made, and then acted upon. The earlier that the river is changed to a course of your liking, the easier it is too change in the first place, and the easier it is to maintain, and to adjust the course should something untoward happen. It is even easy to look for potential bumps in the river, and to allow for them before you even get there.
It helps to look at your income as a river on a number of levels. After all, you can explore a number of income streams, each of which increases the size of your river. You can see rocks (solid problems that need to be avoided) and rapids (softer problems that just need be survived) just by paying attention. It's just a matter of changing the course of your personal river to course that you want it, and then learning to flow with the changes. Just determine how much water you can send out, and which ways are most effective for you; not everyone has the same mix, and that what works for one person may not apply to someone else, and may actually hurt the person. Remember that your needs are not the same as everyone else's, and you should do okay as long as you commit to your personal river.

How to Avoid Debt in Retirement

Avoid debt in retirement by using the right tools and resources today.
Being retired does not have to mean you are bound to a fixed-income existence.
Many couples who have recently retired want to make use of all of their newly found free time by traveling or making large ticket purchases. After a lifetime of carefully saving, they feel that it is their time to finally enjoy the good life.
However, too often the nest egg that has been building for decades can get depleted much quicker than anticipated. This is where the problem of having too much debt in retirement can occur.
In addition, seniors with a lifetime of good credit attract many credit card companies who are more than willing to offer large lines of unsecured credit. Even the savviest of savers can soon find themselves in a financial mess, which leads to stress, anxiety and the feeling that they may need to go back to work and set aside their dreams of retirement.
Other issues that occur in retirement is that it is just "too quiet." When a person is used to being highly productive for so long, they may not feel comfortable with so much time at their disposal - they still need to feed their creative outlets.
Getting older does not take away one's desire to feel productive and contributing to something that is mentally rewarding and stimulating. For these reasons, many retirees are already getting involved with learning about the Internet and what types of business opportunities they can pursue on their own time schedule with no risk to their next egg.
Specifically, when a destructive cycle of debt in retirement has already begun, it is not too late to replace that debt with extra income.
In order to save, traditionally we have been taught to believe one needs to live within their means so that they are able to contribute a substantial portion of their pay into savings. This is solid personal finance advice that still applies today. However, most of us were never taught to create multiple sources of income in order to limit our risk of debt when a primary source of income is lost.
In retirement, that primary source of income is typically the interest received from a lifetime of savings. However, despite what you've been told all your life, interest income is usually not enough to sustain you indefinitely.
As your savings is depleted, growing debt is not far behind. The key here is to attack both sides of the financial issue. That means avoiding debt, while continuing to increase your income - even during retirement!
When it comes to new ways to bring in more income, all a retiree needs to do is think about what they love doing. How do they like to spend their time? What makes them feel productive and provides meaningful rewards?
For example, consider the recent retiree who is an avid gardener. Upon retirement, this person finally has the time and resources to work on their garden and build it to the point they've always dreamed about. They have accumulated a lifetime of knowledge about how to grow a great garden. This is highly valuable information to anyone on the planet who shares your special interest!
Starting an Internet business can be as simple as choosing to share this knowledge with others in some profitable way over the Internet. You do not have to be technically inclined and you do not have to learn a new language. Today, virtually anyone who can turn on a computer and surf the Internet has the skills required to create a profitable home business.
Don't let anyone tell you that you are too old to pursue your lifelong dreams. Remember, in another year you'll be exactly where you are today, unless you choose to take action and do something different now.
On the other hand, if you decide to go for it - you will soon learn that your fears were unfounded and that by taking that first step toward your dreams of life-long financial stability you opened doors of opportunity you never thought were possible.
The fact is, we only get one life to live - and without any doubt, life is for LIVING. Perhaps the word "retirement" should be changed to "re-inspire-ment"?
Creating a new home based Internet business is a great way to create additional sources of revenue so you can truly enjoy your golden years and avoid the risk of accumulating any debt in retirement. And, it's fun!

Making a Will - Don't Put it Off!

What is a Will? Essentially a Will is a legal document that specifies how you wants your assets i.e. property, money, personal affects divided and distributed to loved ones in the event of your death. Most people won't be thinking about their death. But once in a blue moon, we somehow worry about the consequences of our premature death.
You might think that there is not much to leave in your Will but the things that you can leave in your Will make for a long list. They include your home, your furniture, your personal belongings, your keepsakes, your family heirlooms, your clothes, your cheque account, etc. If you took a few minutes to look around, you'd probably be surprised by how much you do have to leave.
One thing to remember when making Wills is that you can also leave a legacy will that will help Cancer Research or similar Charities, like the British Heart Foundation.
This can help them with important research work that will help future generations, and this can be a consolation to your family during their loss. It can also be a comfort you knowing that you have left something of true value to the world.
One important factor when making Wills is to keep an eye on who is going to administer your Will. Is there any change of your guardian status? Is there any change of your executor status? Did they migrate, pass away, suffer a relationship breakdown, incapacity, or bankruptcy? Also, make sure that your Will is kept in a very safe place for your lifetime and that people can access it quickly and easily when the time comes, without having to ask you where it is.
One of the biggest of those reasons is that they don't like to think about their own death or they superstitiously believe that creating this important document will somehow expedite their demise - but it will not! So go and get that Will made as soon as possible!

401k Rollover Option

The Internal Revenue Code uses very sensitive, diplomatic language to describe your departure from a job: The Code never says "lay-off," "furlough," or "suspension"; and its authors never-ever would have considered ugly words like "fired," "dismissed," or "terminated." When they mean retirement, they say "retirement"; otherwise they always refer to packing-up your desk and leaving as "separation." No matter what the circumstances, no matter how grim and painful, the Internal Revenue Code always politely describes it as "separation."
At your separation, you may leave your 401k with your old employer. The law requires the old boss to maintain it for you until you reach retirement age or die. But the old boss reserves the right to charge you administrative fees for watching your money grow. And especially if you suffer "separation anxiety," it's best to cut all the ties; it's your money, so take it with you.
You should take advantage of one among your several 401k rollover options.
If you go immediately to another job, use your 401k rollover to move your retirement funds into the new boss's 401k plan. Because you already have rights and privileges under the 401k rollover guidelines, you do not have to wait for vesting to get into the new company's plan. You may, however, be required to complete your training and probationary period before you exercise your 401k rollover privileges. If you exercise this option, make sure you do not exceed the annual limit on 401k contributions. The new payroll administrator will have no way of knowing how much you already have invested, and if you have increased the amount of income you wish to defer, you create the risk of violating the ceiling. You will have until April 15 of the next calendar year to clear the excess from your account and move it to some other safe, interest-rich place.
If, on the other hand, you carpe diem, seizing this opportunity to follow your passion, setting-up your own business and doing something you've always dreamt of doing, then you will have two 401k rollover options: You may set-up a 401k for your sole proprietorship, administering your own plan according to the IRS guidelines, and keeping your retirement account growing the way it always has. When you hire more employees, you can expand the 401k to include them, too. Or you may exercise your 401k rollover privileges by putting your savings into an Individual Retirement Account at the financial institution of your choice. Most bail-out-proof banks offer excellent investment products with proven track records of exceptional performance, and you will have the option of moving your funds around as you always have. Using your 401k rollover privileges to move your money into an IRA, you also gain liquidity; if you need to invest some of your retirement funds in your start-up enterprise, the IRA puts very few restrictions on withdrawals. You will, of course, have to pay taxes on your distributions, but it still may represent the easiest way to capitalize your new venture.

How Sorting Out a Pension Annuity Sets You Up For the Future

Essentially what most people are looking forward to when it comes to retirement is a chance to take a well-earned rest and do some of the things they have always wanted to but have never had the right time. But many people approaching the magic age at which they will retire are not fully aware of their responsibilities when it comes to the funds they have built up over the years. A pension annuity will need to be sorted, which basically involves turning to fund into a form of regular income. This is an important and delicate subject which you will need to approach with the right knowledge and preparation.
Annuities essentially work like a financial product and many different options are provided by pension companies. They all have different deals and some will be right for people with certain needs, and others will not be so suitable. It is up to you to identify what you want to get out of your retirement and how much risk you are possibly thinking of taking with your fund. Many people seek out independent financial advice when annuity-hunting.
Annuities are normally fixed and cannot be changed once you have signed on the dotted line and purchased one. For example, you will not be able to simply change to a new deal two or three years after you have retired. This makes the decision even more important.
Annuities are also governed by laws and rules, and one of the most significant ones is that the earliest someone can take retirement benefits is aged 50, due to rise to 55 in 2010.
A common option is the lifetime pension annuity or 'conventional' annuity, which essentially is set up to provide someone with a predictable and consistent income for the rest of their life. This is one of the irreversible forms of deal and is inflexible but often seen as a safe option. The other types of products may get you a greater income, but involve a higher level of risk.
Investment linked products are unsurprisingly linked to stocks and shares or things like property which often involve a fund manager ploughing your money into things they believe will result in a return and possibly high income. Of course, this goes both ways and you may lose money as well as gain cash.
The fact most people have more choice than they realise is down to what is known as the open market option, a clause meaning someone does not have to go with the same insurance or pension company which administered their fund when they were working. It is easy for many people to assume they are stuck with the same company, but the fact is they are allowed to shop around a number of different companies and look at a different number of annuity deals.
The only catch here is that someone with a pension fund must change it into an annuity before they reach the age of 75. Essentially an annuity estimates how long you live and uses this as a guide for how much cash you will get on a regular basis for your retirement income. If you have health concerns, you may want to look at an impaired or enhanced annuity which possibly gives you a better income based on the idea you may not live as long as someone who is in better health. Whatever your decision, the right pension annuity could be the route to a long, and comfortable, retirement.

4 Easy Ways to Reduce College Costs and Supercharge Your Retirement

If you're the parent of a high school student you may soon be faced with a very tough decision: Should you continue funding your retirement plan or apply these contributions to help pay for your child's college education?
Many parents require additional resources to assist with college expenses and turn to the financial aid system for help. While you may be uncertain about prioritizing retirement contributions versus college expenses, the financial aid system is quite clear about how they view your retirement contributions. They feel that these contributions can be used to help pay for your child's education and assume that you can play "catch up" with your retirement at a later point.
But before you throw your hands up in frustration and buy into their plan, let's take a look at four ways to shave your out-of-pocket college expenses and keep your retirement contributions flowing.
How Parents Can Cut Their Child's College Costs Now
1. Make Colleges Compete
In order to cut your child's college costs, make colleges compete against each other during the application process. For example, if your child is applying to a private college, send your information to the big public university in the same state too - even if your child has no intention of attending.
Why?
You can create competition amongst universities by applying to:
- Colleges within the same conferences
- Public and private schools in the same state
- Institutions within the same region
This can ultimately mean big savings for you.
2. Make Sure You Have a Plan to "Unzip" Your 529 Savings Plan
Most people think, and were probably told by their advisors, that distributions from their 529 savings plans are tax free if used to pay for Qualified Educational Expenses. But what appears to be a clear-cut case isn't always so when you're dealing with the tax-happy trifecta of the Federal government, state governments and the IRS. So be sure to determine your Adjusted Qualified Educational Expenses prior to pulling any money out of your 529 savings plan account to prevent the ever-present taxman's hand from reaching into your wallet.
3. Apply Early
Colleges are often under pressure to meet early deadlines for enrollment goals. To help meet these goals, some institutions will award merit scholarships to students who apply early in their senior year. This is one of the easiest ways to reduce the cost your family pays out of pocket for college. So get busy filling out college applications as soon as your child starts his or her senior year.
4. Understand the Hazards of Cash Gifts
Avoid having cash gifts made directly to the college or the student during the financial aid "base year" or any year your child applies for financial aid. Cash gifts given during this time period can result in your child losing scholarships and other forms of gift aid (which is financial aid that does not need to be repaid). In addition, it may raise the amount of money your family is expected to pay for college. Knowing how and when to receive such gifts is key to minimizing your college expenses.
Funding your retirement and paying for your child's college expenses impacts your wallet now and into the future. So it requires extensive planning and discussion. Saving as little as $350 dollars a month in college expenses and applying those funds to your retirement could mean as much as $136,000 available to you when you retire. And, that's with a minimal rate of return.

Making the Most Out of Selling Your Small Business at Retirement

Retirement is the holy grail of the working individual's lifetime. Having the free time to travel, spend time with grandchildren or pets, or even hitting the links at the nearest golf course is what gets many through the forty plus years of hard work and dedication they commit to day after day. When it comes to retiring for those who own small businesses, the same thought comes to mind. How do I sell my business and make the most profit?
Selling a business in today's economy is not an easy task. The unemployment rate is at an all time high and many individuals are seeking the help of the government in the form of stimulus checks and unemployment income. What does that mean for the small business seller? Simply put, help is needed. It is near impossible to sell a small business alone or without the help of a small business broker. According to the Business Brokerage Press, the average business broker has a 14-24% success rate, where as an individual sale may only be effective up to 2% of the time. That's almost ten times the success.
Finding the right broker can take some time and research, but it is well worth the effort. The right broker can provide your business with the exposure it needs and the help you need to find the perfect buyer. Business brokers are a part of every aspect of the selling process, from advising, advertising the business through a network of buyers, screening potential buyers, structuring the sale (including valuation) and all the negotiations there out. Business brokers also guarantee complete confidentiality and identity safe guarding.
Retirement should be enjoyed, not spent worrying about income. Make the most out of your retirement years. Work with a business broker to obtain the maximum profit from the sale of your small business and leave the legacy you deserve.
Sara Madiuk is a Marketing/Public Relations Intern at The Provident Group, a business sales, mergers and acquisitions and valuations firm in Irvine, California.

Retirement Planning Mistakes You Need to Avoid Making

Are you ready to start planning and preparing for your retirement? If so, congratulations you are making a step in the right direction. The earlier you start planning for your retirement, the better off you will be when the time comes.
The decision to start planning and preparing for retirement is a wise decision. As previously stated, the earlier you start, the better. With that said, the earlier you start planning for retirement the more mistakes you are likely to make. These mistakes, a few of which are outlined below, can cause financial problems and more when you are ready to retire.
Not creating a budget for yourself and not tracking your spending are two mistakes that you will want to avoid making. This often leads to you spending more money than you have. You should be saving for retirement, especially at around the age of forty, not getting into debt. For that reason, never spend money that you do not have and never spend all of your money. It is best, but a must when you reach the age of forty, to start paying for all of your purchases with cash, checks, or debit cards. Before doing so, however, make sure that you have enough money to spend and keeping on saving for retirement.
Another common mistake that people make, when creating a retirement plan, involves not taking health into consideration. Health and the impact it can have on your retirement can work two different ways. For starters, what if you get sick? Can you afford the cost of emergency surgery or long-term medical care? Even if you are healthy now, remember that your health can always take a turn for the worse. It is also important to note advancements in medical technology. Many men and women are living longer than they originally planned for. You do not want to run out of retirement money just because you lived longer than expected.
In keeping with your health and wellbeing, it is important to examine your spouse and visa versa. There is a good chance that one of you will live longer than the other and possibly a significant amount of time longer. Make sure that you have enough money to retire on your own, in the event that your spouse passes away. It is also important to recheck all important documents. Make sure your will, mortgage, and all property deeds are in order and designed to protect the surviving spouse.
Relying too much on government assistance, like social security, is a mistake that many make. This is a mistake that can be damaging to you. Did you know that social security will only pay for portion of your retirement needs? On average, it only covers about 40% of your needs. What plan do you have for the other 60%? If you do not have a plan, now is the time to develop one.
The biggest mistake that many individuals make is dipping into their retirement funds before they are ready to retire. This is a huge mistake that can have a negative impact on your retirement and your finances in the future. You should never take money from your retirement funds, unless it is a dire emergency. Use your retirement savings as a last resort. If you need cash quickly, consider approaching your local bank or speaking to friends or family members to acquire small loans.
Not knowing all of your saving options is another mistake that you will want to avoid making. Did you know that there are multiple ways that you can save money for retirement? There are, for example, a 401(k) program, as well as Individual Retirement Accounts (IRAs). There are also many others who use stock and bonds to save extra money for retirement. In fact, it is advised that you spread out your retirement savings to offer you protection. Do the proper amount of research online or schedule an appointment with a financial advisor before it is too late.

For Entrepreneurs a SIMPLE Plan May Be Best

Q: I own a small decorating business and I'll be the first to admit that I don't know anything about taxes or retirement plans. I'd like to set up a 401(k) or an IRA or some other kind of retirement plan for me and my three employees. What are the various retirement plan options available for a small business owner and in your opinion, which would work best for me?
-- Wanda S.

A: Wanda, I appreciate your confidence in my humble opinion, but asking me for financial advice is like asking Donald Trump for a recommendation on hair care products. I can tell you what works best for me and my business, but you'll need to do your homework and seek professional advice to figure out what would work best for you. As a side note, I hear that Donald Trump is coming out with his own line of hair care product soon to be called "Big Head." The formula is 1% mousse, 1% liquid nails, and 98% hot air. It should be a big seller among the high brow, comb-over crowd.

Here's my best advice on retirement plans: find yourself a financial advisor (or financial planner) who is has experience working with small businesses and have him or her explain the options available and make a recommendation as to the type of plan best suited for you and your business. When I say "financial advisor" I'm not talking about your know-it-all brother-in-law or your accountant. I'm talking about a broker or financial planner (or other licensed professional) who has a proven track record of making his clients money and is an expert on IRAs, 401(k)s, mutual funds, etc.

The best way to find a good financial advisor is to ask for referrals from your most successful friends and associates. Find the richest, stingiest man in town and ask who his advisor is. Meet with several advisors, explain your situation, and ask for their recommendations. You should also make sure the advisor is a good fit for your personality and your business. If all goes well you will be doing business with this person for many years to come, so make sure the relationship feels comfortable to you and that you are confident in the advisor's ability to manage your money.

Let me give you a quick overview of a few of the retirement plans available to small businesses so you at least have an idea of what's out there before you start your search for a good financial advisor.

As a small business you basically have three types of retirement plans that you can take advantage of: the Self-Employed 401(k); the Simplified Employee Pension Plan or SEP IRA, and the Savings Incentive Match Plan for Employees or SIMPLE IRA. Each allows you to make pre-tax contributions to the plan, which lets you save for retirement and lessen your taxable income by the amount of the contribution. Your investments also grow tax-deferred until withdrawal.

A Self-Employed 401(k) is an option for self-employed individuals or business owners with no employees other than a spouse. The business can be a sole proprietorship, a partnership, or a corporation, including S corps. You can make salary deferrals to this type of plan of up to $14,000 for 2005.

Next is the Simplified Employee Pension Plan or SEP IRA. A SEP is an option if you earn a self-employed income from a full or part time business, even if you are covered by a retirement plan at your fulltime job. A SEP allows you to contribute up to 25% of earned income, up to $41,000 for 2004 and $42,000 for 2005.

My preferred type of retirement plan is the Savings Incentive Match Plan for Employees or SIMPLE IRA. The SIMPLE IRA was created to make it easier for small businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan.

With a SIMPLE IRA you and your eligible employees may contribute up to 3% of earned income (with a maximum contribution of $10,000) on a pre-tax basis to individual SIMPLE IRAs. You must deduct Social Security and Medicaid from your gross income, but you can then make your SIMPLE IRA contribution before other taxes are levied, effectively lowering your taxable income.

As the employer you must make "matching" or "non-elective" contributions into your employees' SIMPLE IRA accounts. Matching contributions means that the business matches the elective deferral contributions made by employees. For example, if the employee opts to contribute 3% of his salary to the plan, the employer must match the 3% contribution.

At first you might cringe at matching your employees' contributions, but as the business owner and an employee yourself this can be great news. As an employee of your own business you can contribute up to $10,000 to your SIMPLE IRA and the business can then match your contribution dollar-for-dollar, which means that you can put up to $20,000 in tax free dollars into the plan per year. The cost of the contributions is also deductible as a business expense.

The non-elective contribution option requires that the company contribute 2% of every employee's earned income to the plan on the employee's behalf regardless of whether or not the employee contributes to the plan himself. For 2005 the maximum contribution you would be required to make is $4,200.

Like a traditional IRA, you can withdraw money from a SIMPLE IRA at any time; however distributions within the first two years of participation are subject to higher early withdrawal penalties than traditional IRAs or Roth IRAs. Withdrawals within the first two years are subject to a 25% early withdrawal penalty. Withdrawals taken after the first two years are subject to a 10% early withdrawal penalty.

As the employer, the advantages of a SIMPLE IRA include: company contributions to the plan are tax deductible as a business expense; plan documents are simple and easy to administer; administration costs are low; and there is no government reporting required by the employer.

The advantages of a SIMPLE IRA for your employees include: contributions are immediately 100% vested; contributions and earnings are tax-deferred until withdrawal; employees can contribute 100% of earned income up to $10,000 for 2005; and employees can direct their own investments within the IRA.

This is a complex topic and I've just tipped the iceberg here, but hopefully this will give you enough information to get the investment ball rolling.

Here's to your success!