At Clear Financial Advice, we frequently speak with new clients who own their own business, and it’s not uncommon for them to tell us that “my business is my pension”.
Having spent years nurturing their business, working long hours, making sacrifices and shouldering the responsibility and uncertainty which running a business can bring, it’s a fair assumption that their business will, one day, repay their hard work and fund a well-earned and long retirement.
Whilst we can’t disagree with the sentiment, having this as their sole retirement plan is beset with pitfalls.
Firstly, having been in control of their own destiny whilst building their business, when they decide it’s time to enjoy the fruits of their labour they immediately become reliant on finding someone willing to pay what they want, or need, when they want it – a situation which seldom occurs.
With business proprietors also frequently intrinsic to the success of their business, a belief that they will become a person of leisure as soon as the sale of their business goes through may also be misplaced. It is just as likely they will be subject to some sort of ‘earn out’, requiring their ongoing involvement whilst the transaction beds in, with their full retirement fund, and the time to enjoy it, only becoming available when certain conditions are met.
We’re not suggesting that you can’t benefit in retirement by having your own business. On the contrary, at Clear financial Advice we help many business owners and directors plan for their retirements in a tax efficient way, and with a flexibility which employees seldom have. Although we would advise against the sale of your business being your only route to a long and happy retirement.
We believe you should have choice and control over when and how you retire. To achieve that, we suggest Clear Financial Advice.