My Business is my Retirement Fund

"My business is my retirement fund" is a statement made by many business owners.
Their intention is to sell the business, invest the proceeds and then continue maintaining their lifestyle worry free. The concept is great, however all too often the end result is disappointing for the owner.

To overcome this problem we recommend you take time to consider two key issues.

What will you realistically realise from the sale of the business? Who will buy it, when will the sale occur and what will you do after this day?
Is the sale going to give you enough to live on in retirement?

To answer the second question you need to understand how much you need in retirement to maintain a worry free lifestyle. Here is a simple exercise to help you answer this question:

Determine your annual personal expenditure now
Divide annual expenditure by six and multiply by 100
The result equals a lump sum which if invested effectively could sustain your lifestyle for 25 years. You will draw on capital as well but you will live happily for 25 years

eg. expenses = $30,000 p.a.

$30.000 x 100 = $500,000

$500,000 / 6 @ 4% (real return after tax, fees, & inflation) will provide $30,000 pa from age 65 " 90.

Now you have the target you can take a realistic look at I what your business may sell for. If there is a shortfall you I need to take the next step and think about how to make this up.

One possible way is to start diversifying money away from your business and saving it.

As you can probably see, these concepts are really common sense. The key to it is to plan for the sale of your business rather than just leaving it to chance.

Don't make the mistake so many other business owners make which is to get so caught up in the day to day workings and forget to step back and look at the big picture.

Remember you will have a life after the business. It is up to you what type of life it is. Please call us.