Retirement
Planning
PLAN NOW BY DETERMINING YOUR RETIREMENT INCOME GOALS
Retirement planning for business owners in our industry is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk.
Fully Fund Your Retirement
Many business owners rely on sale proceeds to fund retirement. If this is your plan, assess your financial needs based on life expectancy and lifestyle goals.
A Strategic Plan is Critical
While money may not buy happiness, it does offer freedom and security—key elements that significantly enhance well-being and provide a sense of control in life.
How Much Do I Need?
Charles Schwab's survey revealed that customers believe $1.4 million ensures financial comfort, while $2.4 million defines wealth. Notably, older individuals tend to seek higher amounts.
Things to Think About
How much you will spend each year?
Spending is dependent on your specific goals and objectives. Not just for your business, but your life. What type of life do you want to have? Imagine your life and make a budget that allows you to live it. Remember to add in something for unexpected expenses – things you can’t control or plan for such as health issues, family emergencies, or any other unexpected expense.
How long will I live?
Only the Almighty knows the answer to this question. But there are actuarial sources that can give you a general guess given your current age, health and so on. When you plan it is important to over-estimate your lifespan, particularly if you have some long-lived relatives. For planning we usually recommend considering the possibility of living to 100 and beyond. You may not live that long but who wants to be in their 90s, in good health, and faced with the fact that their money is running out. Given current and near term medical advances – this is becoming a too real issue for many people – just don’t let this happen to you.
What sort of legacy do you want to leave behind?
Do you want to leave something to your family, grandchildren, or a charity after you are gone? What would you like to see achieved after you’re gone? What will be your legacy? That needs to be factored into the calculations.
How much money have you saved to-date plus what can you get from your business?
Your assets are where your income will (mostly) be coming from in retirement. You need a comprehensive personal net worth statement that includes an accurate and reliable business valuation. It is likely that your business is one of your most valuable assets. Your business may be the very best way to increase your net worth by increasing the market value of that business. So take a hard look at the business and its potential market value!
What is Really Important?
Perhaps most importantly, most of the things that respondents said made them rich were not monetary at all – Like spending time with family or having more time for themselves, traveling, or doing something they enjoy. The first step is to do an Exit Plan, a plan that gets you thinking about all of these things.