Deciding when to retire can be a difficult decision for small business owners. Not only is it hard to walk away from your business, but it's also tough to determine when you have saved enough money to retire comfortably. Here are a few points you should consider to help you figure out when you can afford to retire.

Amount Needed to Retire

While there's no magic amount of savings that can guarantee you'll have enough for retirement, estimates can help you set a goal. Fidelity recommends that you have at least eight times your annual earnings at the end of your career saved before you retire. For example, if you're earning $100,000 per year from running your business, you should have at least $800,000 in savings before retiring.

Another method is to look at the income you'll need to withdraw each year during retirement. Charles Schwab recommends having savings of at least 25 times the amount you'll need to withdraw each year. If you decide to pull $40,000 from your savings annually, for example, you'll need at least $1 million before you can afford to retire. These are just general guidelines, but the more you save, the easier and less stressful your retirement will be.

Value of Your Business

As you put together your plan, consider how your small business will help you attain your financial goals. Will you continue running the business part-time and earn some income? If so, you'll be able to take out less per year from your retirement accounts. If you plan to sell your business instead, the sale value will add to your total savings. In both cases, early planning can help you determine how much you will need in additional savings.

Special Challenges for Small Business Owners

Retirement planning for small business owners can be a bit more challenging than other types of employment because you do everything on your own. While employees of larger businesses receive benefits from their employers, such as 401(k) matches, you'll need to completely fund your savings out of your own pocket and put away more per year to afford it.

You also need to be careful not to overvalue your business. Business owners often have an emotional attachment to their companies, which may lead some to believe it holds more value than it actually does. When trying to sell, these owners may end up receiving far less than they expected. Be sure to get a professional valuation of your business so that you won't be caught off guard.

You worked hard to build up your business and deserve a stress-free retirement. By keeping this advice in mind, you can put together a plan to help ensure you can afford to retire comfortably. When in doubt, consult with a professional advisor regarding your individual circumstances.

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