Never too early for retirement planning

If you're fortunate enough to be able to put aside a little money after you've paid all the bills, your next concern should be where to put that money to ensure a comfortable and secure retirement.

Complexity increases That question used to be much easier to answer than it is today. The volatile ups and downs in our economy and a wave of new investment options have greatly increased the complexity of the investment landscape. Even the smallest of portfolios requires at least a basic knowledge of the options available in today's investment marketplace.

Fund retirement years But one important choice that you should make now - if you haven't already made it - is how you will fund your retirement years. Whether your investments are already going into a tax-favored retirement plan (and I hope they are) or a plain investment portfolio, you should have an overall strategy that looks ahead to when you take leave of the working world. The earlier you begin your long-range plan for retirement, the more choices you have. The longer you wait, the more restricted your options will be.

Your retirement plan can be as simple as an individual retirement account (IRA), or you can opt for a Roth IRA, SEP, a Keogh or a solo 401(k). The best choice for you will depend on such variables as whether you have employees, the size of your practice, your age and your plans for business growth. This is a choice so important (and so complex) that you should seek the advice of your accountant or other financial advisor before committing yourself. Whether you will benefit most from a retirement plan that defers taxes until you begin withdrawals, or whether it's best to pay taxes on your retirement investments now and enjoy tax-free withdrawals at retirement is another decision that depends on both your circumstances and your own preferences.

And, as your business circumstances change, you will want to make certain that your retirement plan continues to reflect your changing needs.

Sell or liquidate?Another important aspect of your retirement plan involves the practice itself. Will you sell it? Liquidate it? Pass it on to a family member to manage? You may not be able to answer this question with certainty now. Still, it should be a consideration in your long-range plan.

If your practice is profitable and growing, you will have a number of options that otherwise would not be available. You can choose to sell the business to an outsider or simply groom a family member or someone else to run it. If either of these is your choice, you will need to decide what role, if any, you want to play once you are no longer at the helm.

For example, would you like to stay on as an advisor or consultant for some specified period? If you do, will the arrangement be folded into the selling price of the business, or will you structure the sale to provide income for yourself during the transition to new ownership? Some business sales are structured in a way that provides for the former owner to stay on as a consultant for periods as long as several years.

Whatever you plan to do, it's important to start early structuring the practice so that it can run smoothly without you. Any business that relies solely on the owner in order to function profitably will be far more difficult to sell or pass along. If you plan to pass the business along, it's important to train your successor by delegating meaningful responsibilities well in advance of your retirement.