Retirement Planning for Small Business Owners


About the Author

eric nikssarian

true Eric Nikssarian, CFP®

Wealth Advisor
West Los Angeles, California

One in ten U.S. workers is self-employed. Many don’t have a plan in place for the future. Learn the ins and outs of small business retirement planning with EP Wealth Advisor Eric Nikssarian.

Small business retirement planning - The Opportunity some Owners are missing

As businesses closed their doors amid the 2020 pandemic, more American workers became self-employed. In 2022, 10.4% of American workers were self-employed—more than prior to the pandemic. Certainly, the flexibility and freedom self-employment offers are enticing. But it’s important to think of the long-term when striking out on your own.


Here’s my perspective as an EP Wealth Advisor in California on the importance of retirement planning for small-business owners and solopreneurs.

Why do some small business owners forget about retirement planning?

The self-employed clients I work with naturally wear a lot of hats—if not all the hats when it comes to running their business. From sales to marketing, and human resources to finances, small business owners can have countless roles. Really, the last thing they want to do is add to their plate.

I know they are pouring everything into their vision: their heart and soul—and their assets. My job is to remind them about the importance of building a nest egg for later and providing a path to get there.

What are the benefits of retirement planning for small business owners?


Retirement planning is more than just a financial necessity. It can come with a host of benefits that can be good for the company’s bottom line. With the right plan, business owners can have the opportunity to save for their own future and save for their employees, which can be used to possibly lower tax liability. Strategic retirement planning can also free up cash flow to help the business.


Planning for retirement as a small business owner requires a bit more strategy than employees who earn a fixed income and have fixed expenses. Income and expenses can fluctuate, and your bottom line is directly impacted by the economy at large.


Yes, it can be more challenging to plan with all of these variables, but it’s not impossible. In fact, business owners actually have some flexibility and opportunities to set aside larger amounts of money, depending on how you structure your retirement plan.

Helping self-employed clients reap the benefits of retirement planning

As a Certified Financial Planner® at EP Wealth Advisors, I would say that one of the challenges preventing small business owners from saving for retirement is just unfamiliarity with how to set up and manage a retirement plan.


Cost can also be a concern for some. In California, we have a low-cost plan that is required for businesses with five or more employees. The plan is called CalSavers. By December 31, 2025, California employers with an average of four or fewer employees will be required to join the state-sponsored plan if they do not already sponsor a retirement plan. But once you progress, there are out-of-pocket costs for third-party administrators and companies that that provide services to the plans so it remains compliant. These expenses can add up.


I look for ways to mitigate these costs by shopping around for plans that not only meet your needs, but also have reasonable administration costs. It’s also possible that you may qualify for a federal tax credit. Some small business owners can get back some of what they put out those first few years as an incentive to open a business. Your personal Wealth Advisor can speak to what’s available in your state.

alternatives to 401(k) plans for retirement


There are also alternatives to traditional 401(k) plans that are a bit more simplistic.


Simplified Employee Pension IRAs (SEPs) and Savings Incentive Match Plans (Simple IRAs) might be a good fit for business owners with fewer employees to fund who aren’t looking to reach the highest limits available in other plans. These are often more affordable and less complicated.


Solo 401(k)s make sense for freelancers and independent contractors who truly work alone. They only require a single participant and allow you to contribute both as an employer and an employee.

starting later in life

I see clients who run the gamut as far as when they start saving for retirement. Today is always the best day to start. I can help you plan on your retirement contributions. Together, we’ll look at your overall plan to determine what kind of funding needs to happen to make your retirement date possibly achievable.


And don’t let retirement planning stop you from starting a business later in life. It’s becoming more common and is a great way to harness the knowledge and expertise you’ve acquired throughout the years into your own venture.


Yes, it comes with some risk regarding retirement. For clients on their second chapter, we want to look carefully at their tax situation and any other income sources to develop a plan that maximizes tax deductions.

basic plans with limited options

Retirement plans come in many shapes and sizes. Generally, as your company grows, the more bells and whistles you can add to a plan. Most business owners tend to start with a cookie-cutter approach to a 401k. With the help of professionals, you can take this one step further to customize the plan design to fit your needs as the owner of your business.


You need a plan that is customized to your business and built to grow with it in the years ahead. That requires flexibility.


Let’s say profits were up considerably this year, but next year you encounter some economic uncertainty. You’re still making payroll, but having difficulty maximizing as much as in previous years. You want a plan that allows you to maximize the opportunity when the cash flow is there—without being on the hook for other “buckets” like profit sharing, etc., during leaner times.


Another business owner who doesn’t expect major dips in profits or changes in payroll may benefit from an additional plan on top of their 401(k) called a defined benefit plan. This is a pension plan that calculates payouts according to the employee’s salary and years of service, not the company’s asset returns.

decision fatigue

These are just two examples of how EP Wealth Advisors tailor retirement services based on the structure and nature of your business to achieve results. Trying to research your options and understand all of these products in addition to running a business can lead to what I like to call “decision fatigue.” It’s easy to feel overwhelmed. We do the legwork so you don’t have to.


Once you consider issues of compliance and ERISA laws and the basic fiduciary duties of maintaining a retirement plan, you can see the benefits of partnering with an advisor and a third-party administrator to offload some of those responsibilities.


Your advisor is here to build a retirement planning strategy that meets your needs. Once we identify a few options, we’ll explain the benefits, risks, and alternatives of each to help you make an informed decision about your future, your employees, and your business.


Call or contact EP Wealth online to find an advisor in your area.



EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EPWA has used its best efforts to verify the data included in this report. The information presented was obtained from sources deemed to be reliable. However, EPWA cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are solely of the authors and subject to change without notice.


Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.


The Retirement Benefit options available to corporations, partnerships, sole proprietors, contractors and other types of businesses encompass a number of additional options and retirement plans that were not referenced or considered herein. The decision to incorporate a retirement plan and the type of retirement plan are subject to the unique needs of every business. For this reason, options not described may be better suited to the needs of your business. Always consult with Human Resources, tax and legal professional prior to implementing anything referenced or implied here.


Hiring a qualified advisor, financial planner and/or establishing a retirement plan do not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any results, projections, or other information being represented or implied will be met or sustained.

EP Wealth Advisors is not in the business of providing legal or tax advice or preparing legal or tax documents. Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.





Our breadth of coverage across the U.S. means we’re local—here to serve your needs at your convenience.