Sitting on your desk in front of the touch screen monitor, you spend your days working to establish your small-scale business. For now, perhaps, your immediate goal is to get the bills paid and households sustained.
Once your business is running, you probably aim to make upgrades to your office. What about a mid-century modern desk, a vintage typewriter keyboard, and one of those comfy, expensive chairs?
Fast forward into time, your small business is in its full swing. You're generating massive revenue and aim to grow the business further so that you can spend your days a little stress-freely.
But, hey, have you ever thought about the time when your weakened body won't let you walk to that office desk anymore? You may have been working to establish your business, but what will you do once old age knocks on your door?
Perhaps, this is the fundamental reason as to why you must have an exit plan ready as a business owner.
Have you not prepared a retirement strategy yet? Well, do not worry as it's never too late. Here's an articulation of how to plan your retirement as a small business owner in two simple steps. Read more!
Start By Answering These Qs
To get your exit strategy in shape, you must begin by evaluating your wants and needs first. Based on this outline, you will be able to select the best possible retirement plan. Here are some questions to get you started.
What is your ideal retirement age?
Marking an estimated date for your retirement gives your retirement strategy an objective. Indeed, it may not be the exact day of retirement as time is often unpredictable.
However, the estimation will give you a rough idea of how much time is available for conserving resources for old age and how much intensive should your retirement plan be. In case you have started planning for retirement in your youth, then you have more time and can save little by little.
When selecting your retirement age, consider a few factors like your current health, workload, business status, and family.
What is your ideal retired lifestyle?
As you're drafting a retirement plan, it is of immense importance to estimate the finances you will need in those times. While you cannot calculate an accurate figure, you can always keep a range in mind.
And, you estimate this range, you'll have to consider your ideal lifestyle. Find out:
- Where will you be residing?
- Who will you be living with?
- Will you be traveling?
- Will you be engaged in any other prominent activity for which you need financial resources?
Having a monetary estimate will help you decide how much you should be conserving each month. Also, it will help to look forward to a retirement age in which you won't get stressed about finances and will be able to enjoy it!
Now, you have prepared an outline of your retirement plan. It's time to consider methods to make it possible. Read on to various methods to fund your retirement plan!
Consider Your Options
Saving up for your retired age doesn't mean you'll have to liquidity the business earnings. There are several other ways to fund your retirement plan. Explore them ahead!
Did you know the government offers financial support and aid to their senior citizens? Usually, the package offered is equivalent to the country's basic income. So, in case you plan to live a simple lifestyle and do not require many finances, you can opt for the pension plans once you enter the retired era.
However, if you do not want to rely on it, governments have other plans. For example, the Registered Retirement Savings Plan in Canada allows citizens to save finances for retirement while still working.
Saying Farewell to Your Business
Once retired, you won't be able to handle the business. Hence, it is of immense importance to figure the future of your small business. There are three possible scenarios to consider:
- Transfer your business to a successor
- Sell the business to an employee
- Sell the business to an unknown, third-party
The amount gained can aid your retired age. However, according to changes in market value, it may or may not be sufficient. There are higher risks associated with relying on business sales as the primary source to fund your retirement. But, you can opt for it as an additional source.
In case you're transferring the business, you must allocate time to teach the individual about handling and operating. The maintained standard will elevate the revenue. Hence, benefiting your successor as well as family.
Fortunately, there is a diversity of retirement plans available today that allow you to conserve money while still running your business. These include:
- 401K Plan
- Independent Retirement Account plan
- Savings Incentive Match Plans for Employees and Small Employers (SIMPLES)
- Simplified Employee Pensions (SEPs)
Some of these plans may involve your employees. Hence, conduct thorough research before choosing the retirement plan for yourself. Evaluate the pros as well as cons. Also, when choosing a plan with the help of a third-party company, ensure the authenticity of the company before finalization.
Video: The Best Retirement Plan Options for Small Business Owners | docstocTV
All is going to be well!
It may be a little difficult to focus on a time when you would not be earning or being financially productive. But, you must embrace the reality that you won't always be able to do it. And, it is much wiser to prepare for the time then let it sneak up on you. Besides, with things planned, you would be able to live old age joyfully and stressfully. You could rest at home and serve as the mentor of the ones who has replaced you. Or, you could spend time doing things you enjoy. Perhaps, you could do some part-time work, volunteer in projects, or even start a YouTube Channel! If you planned finances, you need not be afraid of the retirement period. Remember, joy will come to you only if you seek it!