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11 April 2017

The CEO Exodus (And What It Means for Your Retirement)

The CEO Exodus (And What It Means for Your Retirement)

Out of 74.9 million baby boomers, many are actively transitioning out of the business world right now either by retiring, selling their businesses, or taking alternative employment such as consulting. The number of small businesses for sale nationwide is at a six-year high and it’s not expected to decrease soon. Nearly 7 out of every 10 business owners want to retire in the next 10 years. Many of these business men and women have moderate retirement funds set aside except for one elite group of CEOs who are set for life.

What do they know that you might not?

The 100 largest CEO retirement accounts combined are worth $4.9 billion, which is equal to the retirement savings of 50 million American families. It’s enough to generate a $277,686 monthly retirement check for each executive for the rest of their lives. Now, it’s easy to push aside this information and say, “These people just got paid much more than the rest of us during their careers.” And that would likely be true. But there are certain steps they’ve taken leading up to their retirements that, when put into action, could help you save more yourself.

  1. They choose their plans and advisors carefully. Employee News Benefits reports that fee-disclosure requirements and class-action lawsuits on 401(k) plan fees have been on the rise. What’s more, nearly three out of four companies failed their 401(k) audits in 2014 and the federal government flagged about four of 10 audits for having material deficiencies. Be sure to regularly review your plans as well as the advisors you use to administer them.
  2. They don’t save the way most others save. Many of the CEOs mentioned above hold retirement assets in the form of elective-deferred compensation, which is compensation they have chosen to delay receiving until retirement. This type of supplemental executive retirement plan (SERP) allows them to avoid the annual savings cap that comes with a traditional 401(k). While the strategy isn’t available to everyone, there are other ways to save for retirement beyond traditional retirement accounts.
  3. They launch new businesses and work in other ways after retirement. As life expectancy increases, the idea of “doing nothing” for decades after retirement may not sound appealing. That’s why so many retirees consult, coach or launch businesses. It can be a great way to stay active and to keep cash flowing, as long as you take into account how it will affect your Social Security and other retirement income.

For questions on how to best plan for income after retirement, contact us

Image Copyright: epicstockmedia / 123RF Stock Photo

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