You’ve spent several years running your company; you’ve nurtured that business, grown it, and now it is time to step down. Retirement looms, and even though you’re not 100% certain, what retirement looks like exactly, you know that it is time to step away from the daily grind. Many small business owners across the country are grappling with the issue of retirement: so many questions to consider, points to ponder, and actions to set in place.
The idea of retiring while appealing can also seem overwhelming at times—at least in terms of preparing for that next big life adventure. What can you do to facilitate the retirement process? What will happen to your company? Do you want anything to happen to your company? Are your prepared financially for what the future holds? These are just a few of the questions you will have to think about is getting ready to retire.
A Few Facts About Retiring
Entrepreneurs retire too—though sometimes it may seem as though they are destined to work forever. Did you know that the average retiree will live on almost fifteen years in their retirement phase? Social security will not cover your retirement lifestyle, likely, far from it. Approximately fifty percent of Americans have an actual retirement plan in place. These numbers are not exactly optimistic as far as painting an ideal picture of retirement in the US. And for small business owners, these numbers can get even a bit worse, so it is essential to start planning for retirement in an effective and meaningful way now.
1) Have an exit strategy.
What is an exit strategy exactly? You own a business. As you near retirement, you have to figure out what is to become of that small business. Will you transfer ownership? Sell the company? Leave it to an heir? Or just let it dissolve? These are all viable options; the question is, which makes the most sense for you? It needs to come down to protecting your business assets and investments so that they can benefit you during your retirement—you have worked hard for them after all.
2) Evaluate your retirement savings strategy.
If you are thinking about retiring tomorrow, it may be a bit late for this. However, if you’re still in the “thinking about it” phase, you can implement profitable investment strategies to help you in your retirement. And as a self-employed individual, you have quite a few options here. From Roth IRAs to SEPs, which makes the most sense given your finances and plans? This might necessitate talking to a financial advisor to help you figure out the most prudent path moving forward.
3) Don’t forget about estate planning.
For that matter, many business owners don’t necessarily create an estate plan or even a will. This is a huge mistake. Especially as you near retirement age, you want to have your affairs in order. This is about protecting your family and the assets that you’ve built up so that they can benefit your loved ones when you’re gone.
4) Make planning for your retirement a priority.
We get that as a small business owner. You have so many things going on at any given time that stopping to plan for retirement may not be possible—the thing is, you have to find a way to make it possible. The most prominent mistake entrepreneurs make in the years leading up to their retirement is failing to plan. And this can have significant repercussions, to the point where you might be in a situation in which you can’t afford to retire. This strategy is acceptable if you want to work until you’re 80. Most, however, would rather not, which is why planning for retirement and making it a priority is critical.
First Union Lending is Here for You
If you are thinking about retiring in the near future, we would love to consult with you. Our business loan programs can be used for a variety of reasons, and when it comes to preparing your small business as you navigate the years heading into retirement, additional cash could certainly come in handy. We offer short term loans, lines of credit and merchant cash advances among other loan products. And even if your credit is less than ideal, we likely still have a solution for you. Call today!