Your business is a part of your family and legacy. Once you’ve established your brand, you may be considering what retirement will be like and what to do with your business when that time comes. Retirement planning takes on a different perspective when you’re the one in charge, but you’ll need to be prepared and proactive to make the best decisions for you, your business, and your legacy.
Invest in a Self-Employed Retirement Plan
Retirement funds aren’t just for employed individuals, but the plans can vary for business owners. You’ll want to choose a retirement plan that best fits your current and future financial goals, especially for retirement. The most popular self-employed plans are individual retirement accounts (IRAs), simplified employee pensions (SEPs), or solo 401(k) plans. If you have an employee 401(k) plan, you can easily roll it into a self-employed IRA. If you have a large number of employees, a SIMPLE IRA allows employees to make contributions. A SEP IRA requires you to be the sole contributor. If you don’t have employees, consider a solo 401(k), traditional IRA, or Roth IRA. Consulting with a financial advisor who specializes in serving business owners or self-employed individuals can help you choose the best plan tailored to your specific needs.
Make Retirement Goals
Before you plan for retirement, you’ll need a good idea of what you’ll actually be doing to create a more realistic financial plan. If you plan on traveling the world or owning multiple retirement homes, you’ll need a lot more funds in your savings. If you plan to move to an affordable city and keep expenses to a minimum, you may not need as much. Whether you’ll fully retire or continue to work part-time will also be a major factor in how much to save. Decide what your retirement lifestyle looks like for you, including whether you’ll continue to have a hand in your business. From there, you can make more informed planning decisions.
Determine Sale or Succession
As a business owner, you’re the heart of the operation. Even if you have employees, your retirement marks the end of an era. What will happen to your business when you’re no longer there? You have a few options to choose from. You can sell your business, and it will continue to run under new ownership. If you want the legacy to remain with you, consider liquidating your assets and closing the business for good. If you have a family, you can allow them to inherit the business as an alternative. Merging with another company is also an option. No one can make this decision for you; it’s a deeply personal matter that will require considerable thought and planning. Once you’ve chosen your future exit strategy, ensure that you continue to maintain solid financials and adhere to legal compliance to ensure a smooth transition.
Choose the Right Retirement Location
When you retire, you’ll be spending more time at home and around town. You’ll want to hang up your hat somewhere you enjoy, whether that’s near your former business as an advisor, close to your family, or in an area with plenty of amenities. You’ll also want to consider the cost of living in your retirement location, especially if you won’t be working. An expensive area to live in can drain your retirement savings too quickly, even if you’ve paid off your mortgage. There are several popular retirement destinations to consider if you’re undecided.
Naples, Florida
Florida remains the top retirement destination in the US. Gorgeous beaches, family-friendly amenities, year-round warm weather, and affordable living attract visitors from all over. Naples is a treasure trove on the West Coast of Florida, situated directly on the beach. It is known for its luxury shopping and top-rated golf courses, which retirees particularly favor. Naples is one of the more expensive places to live as a retiree, especially in Florida, so you’ll need to consider this before taking the plunge.
Phoenix, Arizona
Arizona’s largest city has a large senior population for many reasons. The warm weather, natural southwestern beauty, and low state income tax draw in retirees from across the country. There are also numerous Phoenix reverse mortgage options available to provide you with additional financial flexibility during retirement, if needed.
Raleigh, North Carolina
For those craving some seasonal changes and colder winter weather, Raleigh is a popular favorite among retirees. It boasts excellent healthcare, spacious natural forests and parks, and vibrant southern culture. It’s also a very affordable city compared to other destinations, including the ones on this list.
Separate Business and Personal Finances
When you’re a business owner or entrepreneur in control of your own finances, it can be tempting to funnel all of your cash into one simple pot. However, you don’t want to spend your business funds on personal ventures, and you certainly don’t want your business to deplete your retirement savings. Ensure you allocate a salary in your personal account after covering your overhead expenses. Set aside a separate portion of your salary for retirement contributions. Track all of your expenses and finances extremely thoroughly. You don’t want to hurt your business success or your financial livelihood.
Establish Advance Care Directives
Your business is a major asset that will need to be managed after you’re gone, even if only to ensure its closure or sale. It’s important to have your financial and legal affairs in order in case of emergencies. Car accidents, health scares, or reaching the end of your life may put you in a position where you can’t make business or financial decisions yourself. It’s best to prepare for emergencies in advance so your business, assets, and family are protected. Create advance care directives such as a will and a power of attorney. You can appoint someone you trust the most to handle your affairs if necessary. Health concerns are more likely the older you get, so preparing in advance is an essential part of retirement planning, especially as a business owner.
Conclusion
Uninformed decisions can harm your business, including those related to your retirement. Just like starting and operating a business, you’ll need guidance and help as you plan an exit strategy during retirement. Hire financial advisors, accountants, business attorneys, and even skilled brokers if you plan on selling. They will help you make the most informed decision tailored to your needs and goals. Preparing for your retirement as a business owner enables you to protect your legacy, and it’s never too early to start.
Interlinking Opportunities
From (https://paylinedata.com/blog/6-finance-and-accounting-related-takeaways-for-entrepreneurs-in-2025) with the anchor retirement as a business owner
From (https://paylinedata.com/blog/3-different-types-savings-investments-consider-for-business-personal-finances) with the anchor retirement savings for business owners
