Thinking about retirement should not be heresy for a business owner. You are entitled to look forward to the time when you will no longer be responsible for ensuring the continued profitability of your business enterprise. If you enjoy good health, have adequate financial resources, can control the date of your retirement, and have a plan for pursuing interesting activities in the future then you possess the necessary ingredients for a good retirement. If you do not have these ingredients, the odds are that your retirement - if you ever retire - will be fraught with many difficulties.
The key to fulfilling retirement is planning for it. You must plan carefully for your retirement because without a plan you leave your future in the hands of fate and fate will not be as responsive to your wishes as you may need.
Let's look at the key components of a good retirement. First, you must be in good health because your physical condition will provide you with the strength and stamina to enjoy a productive retirement. Don't smoke. Drink alcohol only in moderation. Eat balanced meals. Sleep well and avoid too much unpleasant stress. Exercise regularly and utilize appropriate medical resources for your physical exams and check ups.
The second key ingredient of a good retirement entails having adequate financial resources. For business owners this means that your assets should not be solely linked to your business. Diversify your investment portfolio during the two decades prior to retirement so you are not too dependent upon cash generated by your business. Utilize your company's existing pension plan, fund various qualified and non-qualified retirement plans, and invest in stocks, bonds, mutual funds and annuities. These investments will help you be sufficiently independent financially of your business so that you won't need to worry about the future success of your business in order to enjoy your retirement. We have seen too many entrepreneurs not able to "let go" of their business activities well into their 70s because the business represents to sum total of their financial assets and these assets are not performing well enough to fund the owner’s retirement.
Your intelligence and interests in the world will not decline with age; therefore, you also will need to continually exercise your mind in order to enjoy retirement. Intellectual challenges are good brain food. Read, study and discuss business, political and social issues with colleagues and friends. Take a course at your local university. Your mental health will be enhanced if you leave a legacy for succeeding generations. As a business owner this can take many forms, including continuing as a member of the board of your business, taking on special projects for the business, or in volunteering your expertise to other businesses and community activities.
Retirees who are actively involved with other people tend to remain healthier and live longer than those who do not nurture these involvements. Studies have found that social isolation significantly increase the risk of a loss of health and early mortality. Friends are an important source of emotional support and satisfaction for retirees. Plan to be involved with your friends in ways that will make your retirement enjoyable and satisfying. Your family also can plan an important role in your retirement. Good relations with your spouse and family will positively influence the experiences that you will have with retirement.
Let's look at the third ingredient of a successful retirement - pursuing personal interests and meaningful activities. As a business owner you should look upon retirement as an opportunity to pursue old interests or to develop new ones that you heretofore had only dreamed about. You may choose to find new roles for yourself within the business arena. You many want to become a strategist for the business even though you no longer have operating responsibilities. You may lead some special projects such as identifying new business opportunities, you many want to write a history of your business, or you may choose to become active in your business' trade association. You also may consider helping to train new employees, or if your physical vitality isn't an issue, you may want to embark on an entirely new business venture. The bottom line is that you do not need to fade away and become useless. It would not be surprising if you were to find yourself enjoying a new role as teacher, coach, and/or mentor to others who are starting their careers. Some entrepreneurs derive a great deal of satisfaction helping their successor in a variety of ways - the most important of which is to support his/her ability to perpetuate and grow the business that you initiated.
Some entrepreneurs also report a great deal of personal satisfaction in being able to establish, fund, and lead a charitable foundation or by involving themselves in volunteer church and/or community work. This often helps them productively express their altruistic needs. Whatever you decide to do, do it in such a way that not only allows you to contribute to the success o f others, but also to enjoy those activities that you are participating in. Only you will know the exact nature of these activities.
One caveat remains. Avoid semi-retirement. Semi-retirement is an illusion for most business owners because the tendency will be to get re-involved in the operations of the business and to neglect their retirement plans. If this happens, and it can happen for a variety of reasons, it will create numerous hardships for your successors and will detract from their ability to develop the skills, commitment and competence that will be necessary in order to insure that your business enterprise is successful in the future. A good retirement should be fulfillment of your business dream. Plan carefully for it so that your later years will provide you with enjoyment and satisfaction.
• Begin the retirement planning process early.
• Discuss your thoughts about succession and retirement with your spouse, family
and key advisers.
• Set a time table and then adhere to it.
• Prepare your family and the non-family managers in your business for the leadership and ownership transitions that will occur.
• Transfer ownership and management responsibilities to the next generation in a timely manner.
• Resolve not to involve yourself in business operations once you have "retired."
• Assume as much responsibility as is practical for your successor being successful.
• Develop a healthy lifestyle.
• Involve yourself in interesting new roles and activities.
• Evaluate and choose the estate plan options that will ensure the continuity of your business and utilize the investment vehicles that will provide you with significant measure of financial independence during your retirement.