Running a successful business is a lot of work. Much of your time is dedicated to growing and maintaining your business development to ensure the longevity of your business ventures. Oftentimes a small business owner views their company as their retirement fund; the promise of a long-term payout after years of personal investment. This can be a dangerous outlook on retirement for many reasons. Here is a quick breakdown of 4 retirement misconceptions for entrepreneurs.
The Cost of Retirement is Easy to Calculate
Planning financially for the future is more difficult than one might initially think. As a successful business owner, you have likely set a standard of living for you and your family. There is a lifestyle to uphold even after your days at the office are over and done with. Perhaps you have children in post-secondary school who require financial assistance, or maybe you are caring for an elderly parent of your own. Whatever costs are present during your working life will likely follow you into retirement, in addition to whatever costs may be added. It’s difficult to plan in advance exactly how much money you will require to maintain your established standard of living. Also keep in mind that without the demands of your business you are likely going to be spending more on trips and other luxury items. Everything comes with a price tag.
I Know Exactly How Much My Business is Worth
Your business is worth what someone is willing to pay for it. Although there are educated ways to determine the actual value, it still may not be what you have in mind. Business owners have an elevated sense of what their business is worth because it means more to them than just money. However, for a potential purchaser the emotional attachment may not be present and to them it’s just business. Do not overestimate what your business is worth as part of your retirement plan.
My Business is My Sole Retirement Plan
This method of thinking is very dangerous as a small business owner. There are absolutely no guarantees in the business world for never-ending success. In order to secure your future, further retirement plans should be put in place. If business slows and you have to close the doors, would you be able to care for your family? Having a retirement plan that you contribute to on a monthly basis plays an important role in securing financial stability in your future.
I Have a Plan for the Future
Having a plan is a fantastic way to start, however life does not always go according to plans. People can easily get sick, which can be an imposing unforeseen expense. You could pass away before your plan has come to fruition, leaving your family to financially fend for themselves. There are many ways that life can derail your set future plans and having adequate money in a retirement savings is the safest way to protect against unfortunate happenstances.
Don’t allow your hard-earned money slip through your fingers as you enter retirement. Have a financial plan in place and start contributing early. To discuss other retirement planning strategies, speak with your financial advisor at The Beacon Group of Assante Financial Management Ltd.