Ready for retirement?
By James Murchison - Director at Murchisons
Is retirement approaching? As a business owner, where do you start? It’s important to look at your company as a unique entity, achieving its goals but also allowing enough to renumerate all stakeholders appropriately. And not to mention ensuring you can live the life you want! Plan early and talk to all those involved so your retirement goals can become a reality.
According to a recent BMO Wealth Management survey of 400 small business owners, only a fraction of America’s entrepreneurs are prepared for retirement. And three quarters (75%) of survey respondents had saved less than $100,000 for retirement. And no doubt the same applies in Australia!
Perhaps in your retirement you’re considering travelling, volunteering or downsizing to smaller accommodation. This major lifestyle change can be incredibly overwhelming particularly if you are a business owner. No doubt you’ll be thinking: ‘Where do I start?’
It’s natural to feel apprehensive about whether you have enough to retire on when examining your financials. Many business owners are reluctant to retire, much like sportsmen, they know that once they stop so does the limelight and they’re not ready to face that. Many try to continue earning some income after they retire so as not to diminish capital.
We have a client who has just retired from a company and has started his own consulting business. He later confessed it is “too much work”, he doesn’t have the resources to rely on and he wants to travel more. When asked how he was going totravel whilst working as a one-man band, he replied: “I’ll just take on the projects I want to take on”. When asked why he started the consulting firm he said “because he was still in demand”. The reality – which we see too often – is that he couldn’t let go. After working long hours in a high pressure position for many years this client still didn’t know how to stop - or if he did - what he would do!
Here are three simple tips to think about ahead of retiring:
1. Take a good look at your numbers and start planning early
Work out how much you realistically will need to live on when you retire. By putting a plan in place as early as possible and being honest about what it is you need to achieve, you are more likely to see your dreams come to fruition.
2. Think about how you will answer when people ask you ‘What do you do?’
Perhaps there is a hobby you’ve always wanted to try, or countries you would like to travel to. With retirement comes an identity change, so it’s worth thinking where you would like to be.
3. Involve your loved ones
It’s likely that your retirement will affect those close to you, so break it down into different categories and discuss each with the relevant significant people in your life. This can also help you understand what you might be able to achieve.
As Bernard Shaw once said: “You don’t stop laughing when you grow old, you grow old when you stop laughing.”
By thinking carefully about your retirement goals and involving those around you, you’ll be better prepared and financially equipped to live the life you’ve always dreamt of.
If you'd like professional and tailored advice to suit you please give us a call on 02 9959 5599