Retiring from your business is no easy decision to make. But you’ll eventually have to do it. Small business owners usually have one significant problem in mind: when and how they will retire from their business. It’s an essential question that has many answers. Thankfully, certain fundamentals exist out there that can help you out. These fundamentals come in the form of investments, foresight, and planning. So let’s start with investments first.
Check Your Investments
You built your business for a reason and the main reason to reap its rewards. Well, now that you’re planning to retire, it’s time to know what your rewards are going to be.
Your significant investments in the business come in the form of net income and assets. Essentially, these go directly to your pocket, and whatever liquid assets you have are yours. Moreover, a self-employed 401(k) is also one of your direct investments as a business owner. Once your retire at 59 years of age, you should be able to withdraw whatever investments you’ve made into your 401(k).
Other forms of investments come in the form of external investments. This includes stocks, gold, and other personal investments you might have made while running your business. You can choose to liquidate these investments or keep them running once you’ve retired.
Always check your investments before you retire, and ensure they are in order.
Imagine Your Life as a Retiree
Imagining your life as a retiree is one of the most crucial things you need to do. First, you should consider your plans for the future. Where will you go? Do you plan to live in another country or another state, or are you staying put? Most importantly, you should consider how much your expenses will be once you retire. Knowing your costs before you retire can ensure that you’ve saved enough money for retirement.
It’s easy to say that you’ll save about $1 million for your retirement, and that’s that. However, it’s never that simple. Some people might need more money than that, while some might need less. A good rule of thumb is saving 80 percent of your last income before retiring. If your earnings have been around $100,000, then you should have at least $80,000 in your bank account once you’ve retired.
Shop for Retirement Plans
You should shop for retirement plans before you retire. Unfortunately, many people mistake shopping for a retirement plan once they’ve retired, leaving them frantically searching for one once they leave their business.
When shopping for retirement plans, you should look far into the future. You can even choose to join a retirement community that also offers hospice care for you and your partner, if you have one. It’s best to look for a retirement plan with good healthcare that comes with its financial adviser. However, you should always choose a plan that fits your lifestyle.
Have Your Business Exit Strategy Ready
Many good business people have an exit strategy prepared before leaving their business behind. This strategy should include when you want to retire, whether you plan to sell the company, and how you can transition to retirement. This is why you must envision your life as a retiree first, before anything else. It’ll make it easy for you to make an exit strategy ready.
Appoint a Successor
This step is only required for those who want to continue their business well after they’ve retired. Some old business people want to keep their business going, and they still work for the business as a consultant. While some others are finding with selling the company to a big conglomerate or just sell the liquidate business assets and keep it for themselves.
However, if you want to keep your business going, you’re going to need to appoint a successor. This can be one of the most challenging tasks you’ll have to do before you retire and one you should start years before your planned retirement. But before anything else, judge your business’ financials first, and see whether it can still go into a couple of years in business.
Choosing a successor is entirely up to you. Your experience should tell you which traits will help your business grow and lead it to the ground. Lastly, don’t ever expect that your successor will run the business the same way you do, even if your successor is your child. They will always find unique ways to deviate from how you run the company, and that’s okay! This can breathe in new personality into your business.
Retiring from your business will always be a tough decision, but you certainly don’t want to keep working into your 80s. So plan your retirement and enjoy it when you can.