But the thing with that is, if you don’t have a plan for retirement, you’ll never get to enjoy the spoils of all the hard work you did for so many years. And the scary part is, retirement could possibly come sooner than you think. As morbid as that sounds, being in business requires real world thinking, things happen. The best scenario is you get to retire when you are ready and you have enough saved up to last 30 years or so. Yes, that’s right, it could be 30 years or more.
Here are some thoughts to occupy your mind while you think about it:
- If you haven’t started a plan yet, start now. It’s never too late.
- If you’ve been taking a small salary while expensing some personal costs, this will come back and bite you. The IRS now looks for this and if you need to apply for a mortgage or other loan, you’ll not qualify. This will also help your retirement planning.
- If your personal and business financials are interwoven, this will create confusion. In order for you to really know if and how much money you can stock away for retirement, you need to really know what is available in your business. There are tax advantages for saving money for later years, but the clean financials are your key to defining how much.
- Retirement savings compete with college savings plans and mortgages. You can borrow for the latter 2, not for retirement. Start saving for retirement first. And, when you do need to borrow, lenders will look for stability in income (see No.3).
- Who will you leave or sell your business to? Planning for a child, other family member or a sale is part of your retirement picture. Make sure the value of your business is at an optimum so you can leave with cash in your pocket. Even if you offer financing as part of the sale or succession, it is important that your ducks are in a row when you’re ready to move into retirement bliss.
- Responsible financial management today is the key to your success after all your hard work for so many years. Start that plan today, hire a professional that can best guide you to a maximum return.
Don’t put it off any longer. As the years go by, the need for a longer savings period increases as does the length of retirement.
Paul Beaudette is President of Leading Edge Business Strategies, LLC, a business consulting firm working with companies to fortify their bottom lines through financial analysis, sales coaching and employee development. He can be reached at firstname.lastname@example.org or (207) 577-1948.