If you own a business, you may be pouring your time and energy into day-to-day operations and business growth. But one crucial aspect might get sidelined – retirement planning.
Unlike employees, you don’t have the safety net of employer-contributed KiwiSaver or a regular paycheck coming in until retirement. But with the right planning and a little foresight, you can build a robust retirement plan to help make your golden years truly golden. Here’s some good food for thought, to get you started.
Start early
It may be tempting to delay retirement planning, particularly when the business is doing well and you’re busy building it. But the earlier you start planning for retirement, the better.
This can give you ample time to build your nest egg, allowing your investments more time to grow and bounce back from market downturns. Remember, financial markets can be unpredictable. That’s why it’s important to have a long-term strategy in place.
Identify (and diversify) your income sources
Income in retirement can come from several sources. For business owners, of course, these can include personal savings and income generated from the sale of the business.
However, relying solely on the sale of your business can be a risky proposition. Factors such as market dynamics, industry trends, and unforeseen circumstances could impact your business’s value, possibly resulting in a lower-than-expected sale price. That’s why it’s important to diversify your income sources.
For example, you may consider KiwiSaver, property investments, shares, bonds, and others: just as you wouldn’t put all your eggs in one basket in business, the same principle applies to retirement planning. Of course, as a busy business owner, you may not have time to research your options – and that’s why we’re here. As financial advisers, we can help you understand what’s available and how it may relate to your circumstances and goals.
Establish a succession plan
If selling your business isn’t the right fit for you, consider setting up a succession plan. This strategy involves finding a reliable successor – a family member, a key employee, or an outside hire – who can take the reins when you’re ready to step back.
An effective succession plan means continuity of your business, preserving its value, and could also provide a steady income stream during your retirement. Make sure you keep your lawyer and your accountant on speed dial for any questions relating to business compliance and tax obligations.
We’re here to help
Retirement planning for business owners is a complex task. And that’s why we’re here: to provide tailored financial advice, help you navigate the intricacies of retirement planning, and support you in making informed decisions.
Like to discuss this further? Please don’t hesitate to contact us.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
