Retirement Planning for Small Business OwnersBy Lee Korn | November 2, 2023
Many small business owners tend to be self-starters. Instead of waiting around for the right opportunity to come their way, they tend to create it themselves. That entrepreneurial spirit could be one of your greatest assets, but making the transition to retirement can feel a little disorienting. One of the biggest misses we’ve seen entrepreneurs make in retirement planning is not considering what they’re going to do after they retire or sell their business.
Chances are you’re very involved in the day-to-day running of your business. You’re likely a “doer” who’s used to getting things done. In retirement, your task list and email inbox may suddenly be empty, and your phone may not ring as much as it used to. That can feel utterly jolting. The antidote is to plan ahead for what’s next.
As Harry Emerson Fosdick famously said, “Don’t simply retire from something; have something to retire to.” At Opal Wealth Advisors, we help small business owners and entrepreneurs figure out what that may look like—and make a plan to help bring it to life.
Understanding Your Retirement Planning Challenges
Entrepreneurs and small business owners typically have unique challenges when it comes to retirement planning. It’s probably safe to assume that you’re emotionally invested in the business you’ve built. After years of putting your energy and resources into your business, walking away and beginning a new chapter many not feel easy. Here are some of the most common retirement planning challenges we see among this group:
- Feeling a lack of purpose or drive
- Finding it difficult to let go of your career and work routine
- Feeling unsure about what you want to do next
- Craving meaningful activities to fill your time
Whether you’re approaching retirement or still have a long way to go, the best time to begin planning for the future is now.
Retirement Planning Solutions for Small Business Owners
A strong retirement plan is one that’s built around your unique needs. No two business owners or entrepreneurs are alike, but we’ve been at this a long time and have identified five common retirement planning solutions for folks in this camp:
- Set meaningful goals: How do you want to spend your time when you’re no longer working? Begin by imagining your ideal day in retirement. Maybe that involves working on creative projects, traveling, volunteering, enjoying hobbies or doing some light consulting work. What matters most is pinpointing what’s meaningful to you.
- Create an action plan that feels good: This is where an experienced financial advisor can be a great resource. Our 7-step process, The Opal Way, is designed to help grow the wealth you need to live the life you want in retirement. For instance, we take a deep dive into year-by-year cash flow and expenses. As a business owner, think of it as your personal P&L statement. The goal is to come up with a customized plan that feels good.
- Stress test the plan: Now is the time to brainstorm and model out hypothetical situations that could throw a wrench in your retirement plan—like inflation, longevity or early passing, health care expenses, long-term care needs, family emergencies and more. These things could all impact your retirement plan. At Opal, we stress test your plan to help it withstand these contingencies. If it can’t, we can make adjustments to better prepare for them.
- Monitor things and course-correct as needed: Our strategy then gets granular and makes plans that are 3, 5 and 10 years out. We also build in quarterly reviews to monitor and track progress, and to make any necessary tweaks based on your life changes.
- Treat your retirement plan like a business plan: As a small business owner, you may want to delegate or choose to take a more active role in retirement planning. You can be as involved in the decision-making as you’d like. At Opal Wealth Advisors, we welcome you as a partner and collaborator. Others may want us to manage the nuts and bolts of their wealth while they keep a small side investment account for trading. This can be considered their “play money” that won’t affect their nest egg.
Building a strong retirement plan usually requires a team you can trust, especially if you’re an entrepreneur or small business owner. This is one of our specialties at Opal Wealth Advisors. We listen to our clients, ask the right questions, and lead with their values. Contact us today to get started on your personalized retirement plan.
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