3 Reasons you should plan for retirement NOW
You may be familiar with the saying “The best time to plant a tree was 20 years ago, the next best time is NOW.” If you started your business thinking of it as your retirement ticket, make sure you have a contingency plan. Starting your business does not guarantee an automatic retirement plan for you. If your business is dependent upon your ability to perform, what happens if you are unable to perform for a period of time? Does your business continue to make money, depositing a percentage of that income into your retirement fund? Absolutely not.
Developing a contingency plan doesn’t mean your business fails, it simply means you have a plan for retirement – outside of selling your business. If you have postponed thinking about your retirement planning, here are 3 reasons you should not postpone it any longer:
- -- You may not be able to work forever, or may not be willing to: You started your business because you were passionate about it. There is no guarantee that you will find someone else that will duplicate that passion. You must be prepared for that. Perhaps you have hopes for your children to one take over your business, and they may very well be on board, but be prepared in case they are not. In any case, you will not continue actively working your business forever, so you do need to plan a proper exit strategy.
- -- Your business may not sell for as much as you hope: It is common for business owners to choose to sell their business at retirement. Because you have an emotional connection to your business, chances are, you will always place a higher value on it than it really is worth on paper. Be prepared for this when you put your business on the market.
- -- Social Security is not enough to live on, and medical expenses may increase: As you get older, it is naïve to think that government benefits alone with cover your life expenses. As time goes on, the social security budget continues to shrink while inflation continues to go up, raising the cost of living and medical expense. To enjoy a quality of life in retirement, you must have a plan that includes more than just social security.
No matter how much you LOVE what you do, you probably won’t to do it forever. Think of professions like a plumber, a baker, or a hair stylist; despite your passion for your work, your body will just not allow you to work this kind of professions into old age. As we age, the quality of service that we can offer will eventually start to deteriorate. That’s why we retire.