How Do You Know When It Is Time To Retire As A Business Owner?
Here is a 6 question checklist for any business owner to ask themselves to determine if they are ready for retirement in pursuit of that next life step.
Have I decided on a retirement timeline?
Most people don't wake up one day and decide that tomorrow they will retire. It takes years of preparation. Knowing when you want to retire is the first step toward realizing this goal.
Do I have enough money set aside to comfortably enjoy my quality of life after retirement?
Experts have suggested that upon retirement, you want to have at least 10 times your annual salary in savings. Other important factors to include, are your debts paid off and will you be able to comfortably pay your retirement expenses without depending on social security?
Is my retirement portfolio diversified enough?
Selling your business is one way to fund your retirement, but you don't want it to be the only means that you depend on. Having a diversified portfolio, for example, a self-employed 401(k), SIMPLE or SEP IRA, stocks and bonds, and other investment strategies helps to mitigate risk.
Do I have a post-retirement plan?
Having a post-retirement plan can help you find a purpose in retirement and avoid the common feelings of stagnation that occur with people after they get out of the fast-paced grind of the workforce.
Is my succession plan in order?
Establishing a succession plan is not something that is done quickly. It requires planning and analysis. To start you want to know, how much is the business worth? Identify succession candidates and stay up-to-date on tax planning and the evolving tax laws, to name a few.
Have I discussed my decisions and options with a financial professional?
Creating a retirement plan is complex, and consulting a financial professional can help you design a course of action that works for you and your goals to mitigate any potential mistakes.
Content in this material is for educational and informational purposes only and is not intended as tax, legal or investment advice. If you are seeking tax, legal, or investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Sources: BrainyQuote, Businessinsider.com, Cnbc.com
