Top tips for business owners transitioning into retirement – Part 1 (Guest Blog from Acadia Wealth Advice)

CraigSuper

Chances are you’ve poured your blood sweat and many tears into building your business into the thriving venture it is today.

Now, it’s time to turn your attention to what life looks like as you transition into retirement or pull up stumps completely.

Successfully transitioning out of your business can be a lengthy process with financial, legal and operational obligations. So, it makes sense that the earlier you start this planning process the better.

Business succession plan

Whether you decide to sell up, retire or have to get out of business due to health reasons, it’s important to plan. A succession or exit plan outlines the things you will do when you sell, close or transfer ownership of your business.

When outlining your succession plan consider these important questions:

  1. Who will manage the business on a day to day basis as you wind down?
  2. Is their remuneration structured to align their goals with yours and incentivise behaviour to drive results?
  3. Who will ultimately purchase your business and what action can you take now to maximise the future sale value of your business?

Formulate action plans and work collaboratively with your accountant and financial planner to work through the practicalities and complexities of your exit.

Having the right amount in the kitty for retirement

“How much do I need to retire and will I have enough?” The most common question from business owners.

The answer – it depends! What does your ideal retirement look like? Are you eating out regularly and travelling overseas, or are you satisfied with domestic holidays and the simpler things in life? How much if anything, do you want to leave behind to the family when you’re no longer around?

To give you some indication, research indicates that a comfortable retirement for a couple who own their home may cost $59,971 p.a. ^

The nest egg required to generate this return is estimated to be around $640,000 for couples^.

It’s important to note that these figures assume you will be eligible for a part age pension as your investment capital depletes over time, and is based on the current rate of age pension and means testing rules. Additionally, it does not account for the cost of any overseas travel.

The secret is planning ahead so if your ideal retirement involves being fully self-funded and regular overseas travel, you will likely require a much higher level of retirement savings than indicated above.

^Figures from the Association of Superannuation Funds of Australia https://www.superannuation.asn.au/resources/retirement-standard

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Please note that this is general advice only and should not be taken as advice specific to your circumstances. You should consider whether the information is appropriate for your needs and where appropriate, we recommend you seek professional advice.

About Acadia Wealth Advice:

Acadia Wealth Advice is a boutique financial advisory firm that specialises in providing advice to high net wealth individuals, busy professionals and business owners.

We help people translate their business success into personal financial results.


Learn more about we can do for you 
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