Business owners stay so busy running their businesses that they may not be thinking about retirement. They should! Those who get comfortable with the daily routine and put less effort into building their businesses up and planning for the future may never be able to retire.
When should you retire, and will you be ready? A lot depends on how you’ve prepared financially for retirement and retiring from small business ownership differs from other jobs. You must consider what will happen to your business.
Are you supposed to retire when you reach the age of 65? That’s traditional for many careers, but only some. For example, I learned years ago that police officers typically retire after TWENTY years of service, and the military gives you a pension after even fewer years. However, retiring that young usually means continuing to work because pensions aren’t enough. They return to the same job part-time or start a new career path. Many start their own businesses.
. What Happens to Your Business?
What about business owners? When do we retire, and how? We won’t get a pension, so deciding how to leave work behind takes some decisions and planning. First, you must determine what happens to the business. Some of us will pass our businesses down to our families, and others will sell the business and use the proceeds to fund our golden years.
In that case, increasing your business’s value should become a priority. Stay uncomfortable, work hard to get every contract that you can possibly land, and plan for the day you no longer want to work. You might consider having your operation valued by an expert, so you know how much you might receive from selling your business.
You also have an option of continuing to own the business but assigning a board of directors to run it. Business owners can then remain active in the running of the company on a more limited basis. That way, you continue to receive income but don't work a 40-hour week.
Since you won't get a pension, it's also important to talk to financial advisors like Edward James about retirement savings and investments. For example, you could consider investing in rental properties to provide income after retirement.
What about you? What’s your retirement plan, and what are your plans for the business you have been blessed to own? If you still need to make plans and save money for retirement, you should start because bills will continue to come after you retire. Unfortunately, too many business owners get comfortable running their day-to-day operations and living on the income it provides without providing for the future.