When you own your own business you might live under the mantra that your business is your retirement plan. This can sometimes work out to be true, but it’s not always a guarantee. You do not want to enter your retirement years without a solid financial plan already in place. It’s not enough to rely on CPP to cover all of your living expenses and maintain the quality of life to which you have grown accustomed. Here are some financial plans that might be helpful to have in place long before retirement is on the horizon.
Equity in the Business
It is possible that your succession plan is for you to retain shares in a class where you can claim dividends to supplement your retirement income. If your company is large enough to do this and still thrive then that is certainly a viable option; however, many small businesses would not be able to sustain this type of dividend. It’s important to talk with your financial advisor well in advance of your retirement years to plan if this is the right move for you.
Registered Retirement Savings Plan
Investing in an RRSP is the most secure way to ensure you have money available to you when you need it in your retirement. By making sizable and regular contributions to an RRSP portfolio, you can ensure that your retirement fund has grown to a sufficient size by the time regular withdrawals need to occur. With different investment options available you have the potential to grow your retirement fund over the course of many years.
Since small business owners can’t depend on a pension plan it might be wise to invest in real estate. This can be done by purchasing income property or simply by ensuring your own mortgage is paid in full. Having your own property be mortgage free by the time you want to retire leaves you with the option to sell and make a nice deposit into your retirement fund. Real estate has been known to be a dependable source of income over the years.
As a small business owner you have to juggle many different things on a daily basis. You may not be close to your retirement years but it is imperative that you invest in yourself and in your future in order to retire in a way that is comfortable for you. It’s never too early to start. Speak with your financial advisor from The Beacon Group of Assante Financial Management Ltd. to make the best choice for your future.