Retirement might seem like the last priority for small-business owners. But funding your retirement plan can save 30 to 40 cents on the dollar because of tax breaks.

If you started a business during the last few years, and then watched too much of your earnings evaporate at tax time, you might be able to change that.

If you aren't putting any money into aretirementsavings plan for your business, you are probably giving more than is necessary to Uncle Sam and short-changing your future too. And that is easy to fix.

It might seem like a mistake to stash anything away forretirementnow when your business is demanding so much cash and time. But becauseretirementsavings plans give you a tax break upfront when you contribute money to them, you can often stretch your money further simply by using one of these plans.

"Aretirementplan is critical," said Robert Keebler, a Green Bay, Wis., certified public accountant. "For every dollar you put away, you can save about 30 to 40 cents in taxes."

And once your money is in aretirementplan, Uncle Sam won't touch it until youretireand start pulling money out for living expenses after age 59 {. The money remains off-limits to taxes untilretirement, a much better alternative than keeping it in a bank savings account, where interest is taxed annually.

If you are a sole proprietor with no employees, setting up aretirementplan is almost as easy as opening a savings account. So you don't have to worry about another headache added to the demands of the day. "You go to a broker like TD Ameritrade or a mutualfundcompany like Fidelity, tell them you want to set up an individual 401(k), and that's it," said Denise Appleby, chief executive of ApplebyRetirementConsulting of Grayson, Ga. "It's simple."

The best plan for sheltering as much money as possible from taxes, she said, would be a solo 401(k). The amount you can save is based on a formula applied to your compensation.

For example, say you earn $100,000. Just like any 401(k), you will be able to contribute up to $17,000 as an employee in 2012. And anything you contribute will lower your taxable income. And, as a sole proprietor, you get an extra benefit. As the employer, you can also contribute about $18,000 through the company to your own 401(k), Appleby said. Your business then gets the benefit of reducing taxes by taking an $18,000 deduction.

So as you combine the $17,000 and $18,000, you come up with about a $35,000 contribution to yourretirement, and you get tax benefits on the entire amount. Try the calculator at http://www.tinyurl.com/smallbiz401k.

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Retirement strategy for small-business owners: Grab the tax break

Everyone wants to know how much money they need to save for retirement. When planning, don't forget to account for inflation and fluctuations in investment returns, Hamm says.

Over the last few months, Ive read several articles that center around the idea that people should be saving every possible dime that they can for retirement. For example, Daily Finance recently had an article entitled Forget the 4% Rule: Retirements Common Wisdom Is Obsolete:

The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds we just want simple ways to manage our finances and save a little money.

The theory was simple: If you spent a maximum of 4% per year of your retirement funds, the decline in principle will be slow enough that your money would last as long as you did. Though the percentage seems modest and the reasoning sound, this 4% rule ignores two factors that have become increasingly, glaringly relevant: first, market volatility, which has battered retirement savings over the last decade, and second, inflation, the silent force that erodes purchasing power year after year.

What does that mean?

The other issue with basing your retirement plan on simple rules is that it can lead to complacency. But the idea that you can set it and forget it and everything will be fine is a trap.

There are so many experts telling people different things, that theyre not going to have to worry, DArruda said. A rule means something in writing, something enforceable. But in retirement planning, theres a fluctuating source. You cant take a guarantee.

Lets look at an example case from a reader that Ill call Marvin.

Marvin has $800,000 put away for retirement, mostly in really conservative stuff like bonds and cash. Overall, hes earning about 2% a year on his money. He was bitten by the stock market collapse in 2008 and doesnt want his money in stocks. Marvin wants to retire in ten years, so he wanted to know how much money he should be putting away.

I asked him a few questions. How much does he anticipate spending (in current dollars) per year in retirement? He told me about $50,000. What will his Social Security benefits look like? He estimated around $1,500 a month (adding up to about $18,000 a year).

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Retirement savings: How much is enough?

Even if you have enough money saved to support yourself throughout your retirement, you might still want to work for the intellectual stimulation and camaraderie a job environment offers. Many older workers would prefer to stay somewhat connected to the workforce instead of pursuing full-time retirement.

Most older workers (65%) say they would ideally like to include some form of work in their retirement, according to a 2011 Harris Interactive survey of 1,001 people age 55 and older commissioned by SunAmerica. But only 4% of the survey respondents want to work full time in retirement. A quarter of older workers would prefer to work part time, and 36% want to go back and forth between periods of work and leisure.

Most of us would like to enjoy some time away from the hustle of the working world. And yet, work does have positive aspects. Wouldn't it be nice to have the best of both worlds, with time to enjoy retirement as well as time dedicated to work?

Part-time retirement also allows you to address one of my biggest retirement fears, which is becoming bored as a retiree. As a part-time retiree, whenever you have had enough recharging and find yourself searching for things to do to keep busy and engaged, you can start looking for your next work opportunity. By continuing to engage with the working world on a somewhat regular basis, you will meet a new group of people and assume responsibilities requiring your mental effort and learned skills. You will not have time to be bored.

However, this dynamic retirement strategy may not be for everyone and comes with risks. You will need to save up for an extended period of unemployment and could be offered a reduced salary at a new job. You also might not be able to fully enjoy your time off knowing that you will need to find another job at some point. Part-time retirees need to decide whether to continue to invest in learning new skills and technologies and compete with younger workers who are eager to prove themselves.

It might take some experimentation to find a role that suits you, while also allowing enough of the free time you crave. If one job does not work out, you might need to find another or extend your retirement phase a bit longer. This variety and change could be exciting, and you will have a considerable amount of control over when and how you work. But part-time retirement could also be stressful if job offers are not forthcoming when you want or expect them to be.

For me, the ideal would be a cycle of working for one year and then taking three months of retirement. During the first retirement weeks I would take care of my to-do list. Then I would take an extended journey of three to four weeks. After that I would start researching and gearing up for my next job adventure. With such a plan, there is always something new and fresh on the horizon.

More from U.S. News & World Report:

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Is part-time retirement for you?

BOSTON--(BUSINESS WIRE)--

Fidelity Investments, the leader in helping Americans save for retirement1, today unveiled its Retirement Savings Assessment, the first industry analysis that provides actionable and quantifiable steps across three generations (Baby Boomers born between 19461964, X born between 19651978 and Y born between 1979 1991) to potentially help close their estimated retirement income gaps.

The research finds working American households may experience a potential income drop of 28 percent in retirement2, and nearly four-in-ten (38 percent) retiree households report not having sufficient income to cover their monthly expenses. These estimated retirement income gaps could force significant sacrifices that could include cuts in discretionary expenses. To help improve Americans retirement readiness, Fidelity conducted an analysis that quantifies the potential monetary benefits of five straight-forward steps such as adjusting asset allocation and annuitizing retirement assets. Within the context of a comprehensive retirement plan, this analysis can help individuals better understand which steps may make the greatest impact.

While there is evidence that Americans are saving more for retirement, our analysis finds that they need to take additional steps to prepare for the future and take better control of their personal economy, said Kathleen A. Murphy, president, Personal Investing, Fidelity Investments. The study underscores the importance of early engagement in the retirement planning process and the potential impact these five actionable steps can have in helping address the retirement income gap that many Americans are facing today.

Five Steps That Can Improve Monthly Income in Retirement

Based on the analysis, Fidelity modeled five steps for three generations (Baby Boomers, X and Y) to determine the potential impact on future retirement income. The steps, which are actions often considered when developing and implementing a comprehensive retirement plan, include a mix of strategies that can be taken now, whether an investor is working or in retirement:

Most Americans have the potential to get significantly closer to achieving their retirement goals, but they have to take action and consider implementing a mix of these five steps, said Murphy. Whether youre a younger investor deciding to save a little more in a 401(k) or an older investor adjusting investment plans, its never too early or too late to impact your personal economy and take steps to improve your retirement readiness.

To help Americans take steps to improve their current retirement plan, Fidelity published a Viewpoints article today titled Dont take a lifestyle cut in retirement. The article outlines the five steps and the hypothetical impact of each for a Baby Boomer and Generation X household.

As highlighted within the Viewpoints article, the following hypothetical example outlines the profile of a Generation X household, based on the age groups survey responses4. This generation reported an estimated need of $4,900 in monthly retirement income. Based on their current household salary of $74,000 and the amount currently saved for retirement, Fidelity estimates these households will have approximately $3,200 in monthly retirement income, which represents a shortfall of $1,700 a month (see chart for complete methodology). After applying all five steps to the Generation X household, the estimated retirement income shortfall could be completely erased. The accompanying graphic depicts the potential impact of each step individually and also if taken together (For all generational graphics, please click here):

About the Generation X Graphic Methodology

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Fidelity Retirement Savings Assessment Finds Working Americans Facing Significant Drop in Income in Retirement

As kids, they sat on gas lines in the backs of their parents cars. As young adults, they saw the stock market crash, and when it finally came time to settle down, they bought a house at the peak of the housing bubble and then were faced with the worst economy since the Great Depression.

Its no shock that Generation X those born from 1965 to 1981 may get short changed in their golden years.

Though theyve watched parents and grandparents nestled with pensions, Social Security and strong economic growth, these are no longer guarantees. On the other hand, longer life spans with more medical bills and greater need for cash are the reality for many.

Gen X is the first generation to deal with the fact that the models of American retirement are changing and its members are flustered. The generation once called slackers has been true to form with retirement planning.

There's nothing cuter than viral videos of little kids being adorable, except maybe little kids being crabby. Kathie Lee a...

Gen X is a transition generation, says Carol ORourke, a certified financial planner and Executive Director for the Coalition for Debtor Education in New York City. Gen Xers were young during the tech bubble, and when they came of age, housing was a lot more expensive. With all the talk about whether Social Security is going to survive, there is a sense of not having something to look forward to.

According to a 2012 Insured Retirement Institute , IRI, report, only one-third of Gen Xers are "very confident" about having enough money to live comfortably during retirement, cover their medical expenses, and pay for their childrens higher education.

Just 41 percent of the group have tried to figure out how much money they will ultimately need to save for retirement, and among those who have saved, half have amassed less than $100,000.

Even though they have a longer time horizon toward retirement, there has been a tremendous emotional impact on their confidence in the future. What are they going to do to be sure that they have enough? adds Cathy Weatherford, IRI president and CEO.

Along the same lines, a November 2011 report from the Guardian Life Insurance Company of found 82 percent of Xers believe the economy is headed in the wrong direction.

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Retirement for Gen X workers? Get real

A House committee has approved a bill that would allow federal employees to phase into retirement by working part-time and collecting a partial annuity, while a Senate panel has brought out a budget plan that calls for making federal retirement benefits less generous.

The bill approved Wednesday by the House Oversight and Government Reform Committee with bipartisan support mirrors language passed by the Senate last month as part of a transportation bill that is now stalled.

Under current law, the salaries of federal retirees who return to work for the government are reduced by the amount of their annuities, with some exceptions allowing for full payment of both. The phased retirement plan, which the Obama administration has proposed several times, would allow retirees to work one to four days a week, drawing a proportionate salary and a proportionate annuity.

The plan expects that phased retirees would spend a fifth of their time mentoring younger employees, and that savings of more than $460 million over 10 years would be achieved by not hiring full-time replacements and by paying only partial annuities.

Employees would like to work part time, and we would like them to be able to, said committee Chairman Darrell Issa (R-Calif.). He said phased retirement is a common practice in the private sector and noted that under the bill, it would be voluntary for federal retirees and available only at agencies discretion.

Currently, many federal employees retire from government service on a Friday and come back on a Monday either as a rehired annuitant or as a contractor, he said. However, the exceptions allowing both a full salary and full retirement benefits are rare, and if you tell people that if they keep working they only get half-pay or quarter-pay, youre effectively telling them to retire now.

The panels ranking Democrat, Rep. Elijah E. Cummings (Md.), said, This bill will enable employees to ease into retirement and enable agencies to benefit from the institutional knowledge of their most senior employees.

The committee accepted an amendment that would allow employees to deposit in their Thrift Savings Plan (TSP) accounts the value of unused annual leave they receive upon separation or retirement.

The lawmakers also approved a bill that would require new standards for customer service at federal agencies and make compliance with those standards part of employees performance evaluations, and a bill that would clarify that TSP accounts are subject to federal tax levies, an issue that has been in dispute.

In the Senate, a plan offered by Budget Committee Chairman Kent Conrad (D-N.D.) contains several employee-related provisions based on proposals made by the Simpson-Bowles deficit-reduction commission in 2010.

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Bill for phased retirement moves in House

Usually, when people talk about someone "going through a stage" they are talking about a 2-year-old or a teen. But there's another age at which people go through a key transitional period, also marked by angst and rebellion: Call it pre-retirement.

It sets in by the time workers hit their late 50s, even though they are told they should work for another decade or so to maximize their retirement security. But it hits for real about five years before an expected retirement date. It's the period that Prudential Financial Inc calls "the red zone" and another insurance company, Allianz Life Insurance Company of North America, calls "the transitional phase."

Both of those companies talk about that pre-retirement period in the context of selling annuities -- insurance products that offer tax benefits and lifetime income in exchange for large sums of money. But buying insurance or some other financial product is the easy part of retirement planning; the hard work should happen first.

[Related: Planning for Retirement: Plan to Live to 100]

Here are some guidelines for getting through that phase with a minimum of stress and strain.

Get specific about life planning. This can be the most challenging part of the exercise; the rest is just numbers. What are the activities you really care about? Where do you want to travel and need to travel? What kind of lifestyle do you think you will have? There are ways to get help with this. The University of North Carolina at Asheville runs "Creative Retirement Exploration" weekends (http://ncccr.unca.edu/creative-retirement-exploration-weekend). A variety of books and websites claim to be able to help with lifestyle planning. Mutual fund company T. Rowe Price has a new interactive online exercise called "Ready 2 Retire" that walks older workers through some of these questions.

Become a Social Security savant. The program is complicated, but will make a significant contribution to almost everyone who retires in the United States. There are a series of strategies you can use to maximize your benefits, especially if you are married. Couples can tag-team their benefits, claim them and suspend them, defer them and more.

It makes sense to get a good numbers person, an actuary or an accountant, who understands all of this, to help you figure out which strategy is best for you. At least one company, Social Security Solutions (http://www.socialsecuritysolutions) claims to have all of that down to a science. For a fee, it will come up with a comprehensive benefits plan for you.

Do a health-care plan. Private health insurance will change over the next few years, regardless of whether the Obama healthcare reform law is permitted to stand. And it's impossible to predict the future in the way that some companies ask you to. For example, T. Rowe Price asks: "Where would you prefer to receive long-term care? At home, adult day-care center, assisted living facility, nursing home?"

But you can figure out if you're covered for gaps before Medicare kicks in at 65 and afterwards. How is your health? Do you need to be near certain medical facilities? What drugs do you take regularly? Will they be covered under Medicare? What are your personal priorities in a gap-filling policy and how cheaply and reliably can you fulfill them?

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Stern Advice: Countdown to Retirement

LOS ANGELES--(BUSINESS WIRE)--

Transamerica Retirement Services announced today the appointment of Darren Zino as division vice president of the companys mid-Atlantic region. In this new role, Zino will oversee all sales activities for the region and will be based in North Carolina. He will report to Jason Crane, senior vice president and national sales director.

Transamericas prominence in the small and mid-sized retirement plan arena continues to gain momentum, and we are always looking for ways to meet the business needs of financial advisors and third party administrators, said Stig Nybo, president of Transamerica Retirement Services. Darren is an excellent addition to our sales management team, and I am confident he will be instrumental in helping us exceed our future strategic and growth objectives.

Transamerica continues to experience record-breaking results. For the three-year period ending 2011, new business written sales increased more than 50 percent, and the number of plans sold during the same period increased more than 25 percent. Additionally, at the end of 2011, assets under management and written sales reached all-time highs for the company.

With more than a decade in the retirement plan industry, Zino most recently served as divisional vice president for The Hartfords retirement plans group. He received his Bachelor of Arts in economics from the University of Florida.

Darren is a high caliber retirement services professional who has proven over a distinguished career his unique ability to build strong relationships, said Crane. Ive had the privilege of working alongside him in the past, and his sales record in the region speaks volumes about his acumen for this management role. He is an established leader in our industry, and I am honored to have him join our team.

About Transamerica Retirement Services Corporation

Transamerica Retirement Services Corporation (Transamerica or Transamerica Retirement Services), which is headquartered in Los Angeles, CA, designs customized retirement plan solutions to meet the unique needs of small- to mid-sized businesses. Transamerica and its affiliates have more than 17,0001 retirement plans totaling more than $20 billion1 in assets. For more information about Transamerica, please refer to http://www.TA-Retirement.com.

1As of December 31, 2011.

TRSC 6293-0412

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Transamerica Retirement Services Names New Division Vice President

Impressive!

Last week I asked Morningstar.com readers to sum up their philosophies on investing during retirement in 15 words or fewer, and did they ever deliver. Posts rolled in fast and furiously, nearing 150 in number as of this writing.

Some readers kept their posts focused strictly on investing and other money matters; living frugally and managing downside volatility were key themes among many posts. Other posters interpreted their assignments more expansively; their comments reflect the view that a successful retirement depends on a lot more than portfolio performance.

Although I've tried to summarize the key themes in this article, there were many many more worthwhile posts than I could excerpt here. Please click on this link (http://socialize.morningstar.com/NewSocialize/forums/p/301800/3222133.aspx#3222133) to read the complete thread or share your own philosophy on managing your assets during retirement.

'I Just Want to Be Comfortable'Many users' retirement-related investment philosophies revolve around frugality, both in the years leading up to retirement and during it.

Tommygr9 dispensed this simple formula: "Save like mad. Live below your means."

Bujia is on the same page. "Before retirement: save and invest. After retirement: spend less than you earn."

Lsulaw10 provided a rule of thumb for how much to save, advising, "Save 10% of your income. Be disciplined, be consistent, stay diversified."

Melankfo believes that the starting point for financial success during retirement revolves around having reasonable--and realistic--goals. "I don't want to be rich--I just want to be comfortable."

Several posters also weighed in on the virtues of getting started early. Cliff, keying off of Albert Einstein's famous quote, advised, "Use the 'most powerful force in the universe' . . . compounding!"

Excerpt from:
Your Retirement-Planning Philosophy, in 15 Words or Fewer

WARSAW, Poland (AP) Thousands of people from across Poland demonstrated noisily Friday outside Parliament to protest government plans to raise the retirement age to 67.

The law currently allows women to retire at age 60 and men at 65, but Prime Minister Donald Tusk wants to raise the retirement age to 67 for all Poles, saying it will increase pensions while reducing state debt.

The plan, supported by many economists, has angered the public. The unions are deeply unsatisfied by a new agreement the ruling coalition parties reached Thursday that would allow people to go into partial retirement earlier but with lowered monthly payments for the rest of their lives.

Piotr Duda, head of the Solidarity trade union, said the plan gives Poles the choice of "either working until death or quickly dying of hunger."

The protesters, blowing horns and carrying Solidarity white-and-red banners, were equally vocal.

"People are not strong enough to work as long as machines, 48 years, it is physically impossible," said Arkadiusz Maziar, a 40-year-old coal miner from Zory, in southern Poland.

"Tusk is an office clerk and he will never understand this. I am here to defend the people," he said.

Danuta Nowaczek, a 50-year-old cook from Zabrze, in the South, does not believe that longer work would markedly improve her pension, or that she will live to benefit from it.

"This is a joke, this plan and I don't want to work longer," Nowaczek said. "My father did not even live to get his retirement" at 65.

The crowd showed their anger as the lawmakers were debating a motion signed by some 1.4 million Solidarity supporters to hold a referendum on the matter.

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Polish workers protest plan to hike retirement age