By Christopher Price, CFP®, RICP®, ChFC®, C(K)P®
There are roughly 2.5 million small businesses in the state of Florida. (1) Small businesses are a powerhouse for job creation and keep our state’s economy booming, supporting about 50% of the state’s economy. (2) Since business owners make up a huge chunk of Florida’s population, it’s important for Florida business owners to understand what retirement will look like for them and how to get there.
You pour your heart and soul into your business—it’s only fair that the hard work you put in leads to a rewarding retirement. Retirement planning for business owners requires a different perspective and a few other considerations. Here is what you need to know about retiring as a business owner:
Set Clear Life Goals
Understanding the lifestyle you want in retirement is crucial to calculating how much money you will need and the steps you need to take to get there.
Here are some questions to ask yourself when thinking about retirement:
- What will be my sources of retirement income?
- Where do I want to retire, and what is the cost of living there?
- Have I taken into consideration increasing costs of living and increasing healthcare costs as I age?
- When do I expect to retire, and how much do I need to save to make that happen?
Have an Exit Plan
It’s difficult to imagine that after all the years you have put into growing and protecting your business that you may one day leave it behind. As a business owner, it is important to consider what will happen with your business once you retire. Do you hope to pass it on to a family member or an heir? Do you have someone currently working for you whom you trust to take over your responsibilities when you leave? Do you plan on selling the business to someone else entirely?
The answers to these questions will help you understand how involved you want to be after you retire and the steps you need to take to make sure you’re bringing in enough income to sustain your retirement lifestyle.
Another important reason to have an exit strategy is because you may need to leave the business earlier than expected. If you run into health issues that force you to transition out before you had planned, will you and your business be prepared to pivot?
Appraise the Future Value of Your Business
As a business owner, your business is likely your biggest asset. Your business could be worth more than your home and other accounts, but how do you know what it will be worth when you decide to retire? Understanding the true market value of your business is key.
Although getting a valuation of your business years or decades in the future can involve a certain amount of speculation, one common mistake is overestimating the value. This is why relying on the sale of your business to fund a long retirement can be a problem—since you cannot reliably gauge how much a buyer will be willing to pay.
What if the services or products your business provides become obsolete? What if the success of the business is very closely tied to your personal relationships? These factors can make a dramatic difference in what you believe your business is worth versus what someone is actually willing to pay. That is why a business valuation is strongly recommended.
Consider Other Investments and Retirement Plans
Business owners can open many of the same retirement accounts as regular employees. Putting your savings into tax-advantaged retirement accounts is one of the most powerful ways to save and grow your wealth for retirement. Here are examples of five retirement plans that may work for you and provide benefits:
- IRA (traditional or Roth)
- Solo 401(k)
- SEP IRA
- Simple IRA
- Defined benefit plan
Reach Out for Help
As a business owner planning for retirement, there are many factors to consider. Having a financial professional you can trust can play a pivotal role in preparing a successful retirement strategy. If you want to get started on your path toward retirement, schedule an introductory discovery consultation by calling (954) 625-1531 or emailing me at [email protected].
Christopher Price is a financial advisor and investment advisor representative at Coastal Wealth, a full-service financial planning firm dedicated to going the extra mile to serve its clients with excellence. With over 10 years of experience, Christopher works with high-net-worth and business owner clients, using an educational approach to guide them through the opportunities and challenges they face so they can pursue their goals with confidence. Christopher is known for building long-lasting relationships with his clients and for providing a safe environment for clients to ask questions, receive honest and understandable answers, and become empowered to make the appropriate financial decisions for their lives. Christopher graduated from Susquehanna University with a bachelor’s degree, double majoring in finance and entrepreneurship. He also holds the CERTIFIED FINANCIAL PLANNER™, Retirement Income Certified Professional® (RICP®), and Chartered Financial Consultant® (ChFC®) professional designations. Christopher’s passion for education has led to him partnering with his community to provide workshops on a variety of financial topics that are designed to help financial literacy and confidence. He also founded a not-for-profit organization called Invest in Knowledge, where he and his team coach the community and local organizations through their financial journeys.
When he’s not working, you can find Christopher exploring his many interests and pursuing his extensive goals, including studying for his pilot’s license, traveling, playing baseball or golf, enjoying the ocean outside his front door, or taking his dog, Ranger, to the dog park. He also loves to donate his time and money to local charities and causes he cares about. To learn more about Christopher, connect with him on LinkedIn.
**The views and opinions expressed are those of Christopher Price. Christopher Price’s views are not necessarily those of MM Investor Services LLC or its affiliates.
Christopher Price is a registered representatives of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC www.SIPC.org. 1000 Corporate Drive, Fort Lauderdale, FL, 33334. (954) 625-1351** CRN202403-2017166