3 Questions You Need to Ask About Retiring from a Family-Owned Business

One of the most pressing challenges owners of family businesses face is developing a retirement plan and exit strategy. As a business owner, the majority of your wealth may be tied up in your business, so it makes sense that your focus is on business growth – not personal retirement planning. Whether your retirement is fast approaching or a decade away, it’s critical to be prepared. However you choose to approach it, taking the necessary steps to plan for your retirement could allow you to rest easier, knowing you are on the path toward the retirement you deserve.

As you prepare for retirement, here are three key questions to ask to help position yourself for the retirement you’ve always envisioned.

Will My Business Fund My Retirement?

When it comes to your business, you’ve likely designed a succession plan to ensure the transfer of skills, knowledge and wealth to maintain business continuity. Whether the business is staying in the family or being sold, a succession plan helps provide a smooth transition. However, it’s critical for business owners to understand that a transition strategy – such as selling your business – is often not enough to finance your full retirement.

Business owners often expect to use the sale of their business as their biggest source of retirement income. However, there are several challenges to relying too heavily on this strategy, including:

  • Inaccurate perceptions or valuation of your business.
  • Fluctuations in the market.
  • Liabilities and risk that may impact the value of the business.
  • Difficulty selling the business – or selling for the value you expected.
  • Complications with your succession plan.

By understanding what it truly takes to fund your retirement, you can ensure that the strategies you put in place produce the outcomes you’re looking for.

Do I Need a Retirement Investment Advisor?

We know that it takes planning to ensure your post-work years are everything you’ve dreamed of. For business owners, however, there can be a disconnect between plans for the business, and plans for personal retirement – and a lack of knowledge of how these plans can work together. The best way to bridge this gap is to partner with a reputable retirement investment advisor who can help you understand how you can grow and manage your retirement assets.

The right partner can help you navigate a variety of investment options combined with ever-changing regulations and tax laws. However, with an increasing number of advisors promising that they can help you plan for retirement, it can be difficult to know who to choose. Here are some characteristics to look for in a retirement planning partner:

  • They work in your best interest – not their own. They have always operated under a fiduciary standard of care.
  • They help find the options best suited for your personal financial needs and retirement goals.
  • They can help you leave the legacy you’ve worked hard to achieve outside of your business.

Once you have the right partner, your question may shift to, “How much money do I need to retire?” Unfortunately, the answer is not that simple. Every business owner has his or her own set of unique circumstances, and total retirement savings are dependent upon a wide variety of factors including:

  • Expected retirement age paired with expected life expectancy.
  • Expected annual spending in retirement years.
  • Funds available from other retirement plans such as a 401(k), IRA or pension.

While it can be daunting to look to others for help with your financial future, it’s important to work with someone to help you navigate the complexities associated with retirement. The right retirement advisor will help meet your needs and guide you toward a financially secure retirement.

What is the Next Best Step?

To help you start the transition process, spend some time envisioning your retirement. You may want to pursue a passion or hobby, focus on physical fitness, travel, or spend more time with family and friends. Allowing time away from your business to reflect, will give you the freedom to plan your ideal retirement.

Once you understand your retirement goals, you need to work with your investment advisor to understand how best to manage your retirement assets. For business owners, the possibilities can be endless, and working with an experienced advisor will help you make the right decisions.

Stepping away from a business that you’ve invested substantial time and money into can be emotional. The next best step to take towards retirement is to find a retirement advisor to help you understand your options. Ultimately, as a business owner you want to implement the right plan for the success of your future and your business.

Helping You Get There Today

When it comes to planning your retirement, you’ll likely have a lot of questions. The right retirement advisor understands the issues facing business owners like you, and can help create a retirement plan to fit your needs. Find an advisor with a client-focused philosophy, who is committed to taking good care of you. At Kowal Investment Group, our goal is to help our clients achieve their goals of retiring well. Contact us at 262-522-4040 to learn more.

Raymond James Financial Services and its advisors do not provide advice on tax or legal issues, these matters should be discussed with the appropriate professional.

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