PLANNING FOR SUCCESSION AND RETIREMENT
Success and Retirement Plan For Your Business: Business owners are in a unique position when it comes to retirement. Not only do they need to save up for the years ahead. They also have to create the building blocks for a succession plan. Although it may be tricky, you can put both wheels into motion by deciding on these things:
The date you want to retire. When creating or updating your succession plan, taking when you want to retire into account is extremely important. This is because that will be the time your successor takes over. You must factor in when you’d like to let go of your business. Also when you’ll have enough financial resources to carry you through the rest of your life. Excessive spending or debt can delay your retirement and throw off your succession plan. To avoid this, you can start implementing debt management and elimination within your financial approach. This will ensure you are in the best position moving towards retirement.
How much is enough? Don’t miss this crucial step. If you would like to move once you retire, take into consideration the cost of living and any state taxes you may be required to pay in your new state. If you want to keep your current home, don’t forget to factor that in as well. There are also things like inflation (which could add 2% to 4% per year in costs), and the type of lifestyle you’d like to maintain to consider. With so many different things vying for your finances, you may need a majority of your current annual income. If you sell or have a buy-sell agreement, this may give you an influx of income that you can budget to help support you throughout your retirement.
Your retirement income. If your succession plan includes selling your business, this could be a major contributor to your retirement finances. If you decide not to sell but pass on your company to family or a trusted employee, you could become a consultant for the business. This could provide you with a source of income while in retirement. These two options are in addition to any retirement accounts you have contributed to during your career and Social Security.
Economic changes. You should always expect the unexpected. If economic or marketing dips have required you to funnel your retirement fund into your company, this could impact your retirement and succession date. This could also mean that you might be forced to lower your salary and the amount you are able to set aside for retirement.
When it comes to success and retirement plan for your business, It is easy to become overwhelmed with the process of retirement and succession planning. Contact us to find the best ways to reach your goals.