Everything went back into my business. Is selling it my retirement plan?

The question

An illustrative letter.

The answer

My dear, twenty years of putting every dollar back into the trucks is twenty years of building something real, and I respect that. When I founded a family real estate agency, I did much the same. But I learned, as many owners do, that a business is only worth what someone else will pay for it on the day you want to leave. You still have time to give yourself a second leg to stand on, and at 54, the law gives you some help to do it.

What will a buyer actually pay for my business?

A buyer pays for the profits they expect to earn after you are gone, plus the value of what they take over, such as trucks, contracts and customers. That leads to a few hard truths.

• If the business depends on you, it is worth less. If the customers call you, the drivers answer to you and the routes live in your head, a buyer is paying for a business that might walk out the door with you.
• Trucks lose value. Equipment that has been driven hard for years may be worth much less than you paid, and a buyer will look closely.
• Profits on paper matter. Many owners keep taxable profit low on purpose. That saves tax today, but a buyer values the business on the profits the books show, so low reported profits can mean a low price.
• Selling takes time. Finding the right buyer, agreeing a price and closing a sale often take many months, and markets for small businesses rise and fall. You may not be able to choose the year.

None of this is a reason not to sell. It means the sale price is a hope, not a plan. A plan has more than one source of money.

How can I catch up on retirement savings at 54?

The tax law lets people aged 50 and over save extra each year, called catch-up contributions, and business owners have several plans to choose from. The 2026 limits are:

• A 401(k). You can defer up to $24,500 of your own pay, plus $8,000 more because you are over 50. The business can add contributions too, within a total limit of $72,000, not counting catch-up.
• A SIMPLE IRA. Easier to run, with lower limits: generally up to $17,000 of your pay, plus $4,000 more after 50. Plans at some smaller employers have slightly different limits.
• A SEP IRA. The business contributes a percentage of pay, up to 25 percent of compensation and $72,000 in total, but there are no catch-up contributions.
• An IRA of your own. Up to $7,500, plus $1,100 after 50.

There is an important catch for a business like yours. If you have employees, as most trucking companies do, these plans generally have to include eligible employees too, with contributions or matches for them as well. A plan only for owners, sometimes called a solo 401(k), is meant for businesses with no employees other than the owner and a spouse. A CPA or plan provider can tell you which fits your company and what it would cost.

What would saving now actually add up to?

Let's do simple arithmetic, before any growth. If you set aside $1,500 a month from age 54 to 67, that is $234,000 of your own money. If you can reach the full $32,500 a year in a 401(k) with catch-up, that is $422,500 over the same thirteen years. Invested sensibly, either could grow further. Either one could stand beside the sale price as a second source of money, so the business does not have to carry the whole weight.

What does it mean to pay myself first?

It means you are an employee of your business too. Set yourself a regular salary, and send a fixed share to retirement savings every month, before the money goes back into the company. Treat that payment like a truck note: it is not optional, and it comes off the top. The business will adapt, as businesses do.

How do I make the business worth more when I sell?

Start now, because these steps take years. Train someone who can run the yard and handle customers without you. Put customer agreements in writing. Keep clean, complete books, so a buyer can trust the profits they see. Keep the fleet maintained, with records. Each of these makes the business less dependent on you, and a business that runs without its owner is worth more to a buyer. An honest valuation from a business appraiser can show where you stand today.

What about Social Security?

Self-employed people pay into Social Security through self-employment tax, and benefits are based on the earnings you reported over your working life. If you paid yourself little or showed low profits for years, your benefit may be smaller than you expect. Your earnings record and estimates are in your account at SSA.gov. Look at it this month, so you know what you are building on.

Is it too late?

No. Thirteen years is a long time to save, especially with catch-up limits on your side. You built a fleet from the ground up. Building a retirement account beside it is a smaller job than the one you have already done.

One thing to do this week

Look up your Social Security earnings record at SSA.gov, and ask your CPA which retirement plan fits a business with your number of employees.