business

How Will My Business Fund My Retirement Income?

Funding your retirement income from your business depends on a number of factors, so it takes a systematic approach to make it work.   I will cover some of the main points to consider to have a reliable retirement income.

The first question to answer is what is going to happen to your business in retirement?  Are you going to be involved in running it, either on a full or part time basis?  Do you want to maintain full or partial control of the business?  Are there key employees or family members that you want to run or buy the business?  How long will a full or partial sale of your business take?  What is the value of your business, can it currently generate a cash flow to meet your expectations?  For many business owners, most of their assets outside their home and possible vacation property are tied up in their business.

If you are planning to sell your business to a third party and move on, things should be fairly simple once the deal is done.  Congratulations if Microsoft made your business an offer you couldn’t refuse.  Then your only question is, “do I have enough money to retire on”, after the taxes and expenses are paid?   I will address how much money it takes to retire in another post.

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Business in Retirement

The idea of starting a business in retirement may be novel to some, but is gaining more popularity, and the average age of business owners starting a new business has been increasing because of retired people getting into the game.

The main reason to look at starting a business in retirement may be the extra income it can bring, but there are other important factors as well for starting a new business such as keeping up with your contacts, keeping up to date with computers and new technology, and having a meaningful and valuable activity to do during retirement.  Many of my clients feel the exhilaration of being on permanent vacation during the first year or so of  their retirement, but can become restless later on.

Types of Businesses to Start

A good business to start is one that uses the expertise you have already have from work, interests or hobbies.  This could include many areas such as contract and consulting work, photography or videography, creative writing, affiliate marketing, landscaping, maintenance and repair, bookkeeping, or whatever you are good at and think there is a market for.  Many of these business do not require a large investment in equipment, or you may already have the equipment you need from your work or hobbies.

How to Manage your Time

The greatest benefit of retirement for many people is time freedom.  Once you have won this freedom for yourself it is not something you are likely to give up.  It is therefore important to not let your new business overtake your free time, unless if it your choice.  Of course there will be times when your business will demand more of your time, like during the start-up.  You can help protect your time freedom by taking shorter term contracts, or configuring your work so you only do it during certain months of the year.

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