How Will I Ever Be Able To Retire?

by Debi Enders

Like many small-business owners, you may be too busy running your business to imagine your future retirement. But it’s smart to begin planning sooner rather than later. Here are four ways to get started.

1. Start saving. You may think you’ll retire on the money you receive by selling your business. And you might! But it can be dangerous to rely solely on those funds to finance your golden years — too much can happen between now and then. A better approach is to save 10 to 20 percent of your gross income each year. If 10 percent isn’t possible, then work your way up. The important thing is to start saving — even if you haven’t yet opened a retirement account.

2. Set retirement goals. Ask yourself what kind of retirement lifestyle you’re seeking. Simple, extravagant or something in between? It’s easier to plan if you know the result you hope to achieve. For example, depending on your goal, you may need to consider ways to expand your business to increase its revenue and long-term value.

3. Build your support team. Retirement planning is not a do-it-yourself project. You will need a team of professionals to help you navigate investment and retirement savings options, conduct a valuation of your business and understand the tax implications of selling it. Such a team typically includes a business attorney, a CPA and an investment adviser.

4. Plan your departure. If you plan to fund your retirement with the proceeds of a sale, you need to make sure someone will want to purchase your business. That means approaching potential successors long before you plan to retire. If a family member or employee isn’t interested, you’ll need to start preparing for a sale three to five years before your retirement date.

Debi Enders (debi.enders@commercebank.com) is vice president, small business banking at Commerce Bank.