5 Retirement Tips For Landscapers

Entrepreneurs go in business for a number of reasons, and you would be hard pressed to find retirement benefits to be one of them.  Yet ask employees about why they chose or stick with a job, and benefits, including retirement, are often listed.  Landscape contractor business owner’s earnings lag behind that of most other business owner groups, and so does their retirement planning and saving.

According to a TD Bank survey in 2015, 47% of small business owners do not have retirement savings and 25% simply plan on closing their doors when they retire.  Additionally only 51% had business management experience or expertise when starting their business.  TD’s survey was done on businesses with fewer than 100 employees and less than $5 million in sales.

Many business owners count on selling their business to fund their retirement.  That is putting a lot of eggs in one basket which is not advisable.  Business values can often fluctuate over time as market places and the economy change.  Unless you have a real market value strategy for building your business with a sale in mind, your actual sale price may be far below expectations.  It is best to create other retirement funds sources beyond your business sale and social security.

In June 2015, the Government Accountability Office found that average Americans between the ages of 55 and 64 have about $104,000 in retirement savings.  Placed in a lifetime annuity that would yield about $310 per month.

The average retired American worker now receives $1,335 per month from social security.  At this time social security will only replace approximately 40% of earnings.  With only $310 on average from savings income, some future retirees income will be far below financial advisors recommendations of 80% as a minimum.

Why am I telling you this?  I’m telling your this because HindSite Software’s Green Industry Benchmark Study for 2016 reveals 92% of landscape business owners regard having a happy customer their top priority regardless of whether they make a profit or make their profit margin.

The same survey tells us over 80% of companies experienced growth in sales while earnings remained flat.  Despite dismal earnings performance only 6% of contractors had a goal to increase profits.  Landscape business owners, how will you retire?  The only way is to increase your profits beginning now, plan for retirement and execute the steps needed to meet your goal.

Envision your retirement goal. Use a free online retirement calculator and your social security statement to determine how much you need to save to meet healthy retirement income guidelines of 80% of earned wages at retirement. 

Hire a pro. Use business consultant like a CPA or specialist in your industry to fine tune your business operation for optimum growth and profit to generate income for retirement savings.

Know your options. Open a retirement savings account now if you do not have one. There are newer robo advisor companies like Betterment and Wealthfront to name just 2, that offer low cost, automated investing you can set up yourself. Stock and bond picking and allocations of each are automated to match your goals. Include any prior savings plans in your calculations as well as any other revenue sources such as real estate to be sold or rented.

Make it automatic. Fund your retirement account with automatic withdrawals from your bank account if possible, just like paying any other obligation. Make you #1 in your life.

Stash the cash. Record all cash from customers and use it to fund your retirement account because hoarded cash will never grow. You will have to pay social security taxes, but will not pay income taxes until withdrawal years from now. This strategy will increase your social security income later.

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Harold Fox is a green industry business consultant with more than 30 years in landscaping. www.haroldfoxllc.com

 

 


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