The Finance Experts to help Business Owners Prepare for Retirement


A successful business does not necessarily protect a person from financial problems. Balancing personal and business needs can be a constant challenge. Like everyone else, businessmen and women need to create a retirement plan that will protect them and their families.

1. Do not assume that the sale of your company will generate enough money to fund a retirement.

Retirement means no income earned from work. Therefore, a nest egg is needed that produces income through investment or can be withdrawn over time. Business owners assume that they will get their nest egg by selling their company. Problems arise when the business cannot be sold at the price required to allow the owner to retire. Savings for retirement can reduce this risk.

2. Plan to increase any income you receive from the sale of your business.

Remember that you may receive periodic payments instead of a lump-sum from the buyer if you decide to sell your company. If this is the case, it’s important to plan your portfolio so that you can supplement the money you receive when you sell your business with other sources of income. This will give you the financial security you need in retirement.

3. Create a succession plan for your business.

Planning for business succession is a powerful tool that can protect a company from events that could change the course of its life. Divorce and disability are just a few examples of life-altering events that can have a significant impact on a business. Planning ahead before these events can help you navigate any negative reaction.

4. Increase your profit percentage.

Calculate your profit percentage using the percentage of revenue. Prioritize increasing cash flow and profit percentage. When you feel comfortable with your business’s profit percentage, fund a rainy day account. Then, only then should you invest a portion of your profits in ETFs that track the total market, real estate or other ventures for income.

5. Put aside a portion of your gross income for retirement savings.

Always pay yourself! One wise decision I’ve made is to set aside a certain percentage of your gross income for a retirement or savings account. Then, pay this account first. This allows you to better manage your P&L as you will be able to view it as an expense. Owners often create a business strategy, but do not periodically review it and implement it. Plan your work and then implement your plan!

6. You can take part plan it correctly.

Be sure that the 401(k), or retirement plan, is set up so that the owner of the business can participate. Regulations governing highly compensated employees may prevent the owner from taking part (depending on what type of employee you are). A safe harbor 401 (k) plan will maximize the owner’s participation in the 401(k).

7. Separate your personal and business finances.

Don’t try to save your business by using your house or the college fund of your child. When approaching retirement, it is important to remember that all businesses have a cycle. Selling your business and letting the new owners take over can be difficult for an owner.

8. Invest in assets that are not business-related.

Build a safety net of assets outside of the business that are tax-efficient, safe and uncorrelated with the movements of the broader market indexes or your business sector. Get as much money off the table during times of high profits to ensure that you don’t have to rely on the liquidation of your business for retirement.

9. Create an estate plan, and purchase a life-insurance policy.

Two things are important: an estate plan prepared by a professional and life insurance. The estate plan involves reviewing wills, powers-of-attorney, estimating taxes, and planning for the family business. It is easier to get life insurance when you have the main business partners and key players insured. This will protect your debts and collateral.

10. Create a tax strategy for the long term.

A good exit strategy should include both financial planning and tax strategies. Your financial future can be greatly affected by optimizing your tax strategy over the long term. Solid tax strategies can impact one’s ability grow and maintain wealth. This can impact not only your financial situation during retirement, but also the ability to retire.

11. Measure your progress towards retirement goals.

Plan ahead, prepare for the unforeseeable and set benchmarks to help you reach your retirement goals. It is important to have insurance for you and your key employees. Diversifying your retirement funds to include things other than the business value is also a wise move. The value of the business to you is not necessarily what you can get in the future.

12. You can sell off a small part of your company.

Sell a small part of your company that will provide you with enough money to maintain your family’s lifestyle in the event your business fails. You can, as the saying goes, “take a few chips off of the table” by diversifying your investments and not being 100% invested in your business.

13. Consider passive income sources.

The key here for me is to consistently and periodically move assets from my business into tangible passive-income-producing assets. My passive income will eventually cover my salary, overhead costs and overhead so I won’t be dependent on the income from my business. The business can be sold or I can hire someone to run it on my behalf.