So, do most young, ambitious self- employed business people think seriously about their retirement or retirement planning when at the supposed peak of their powers? I have a strong suspicion that those who would readily admit to it, would certainly be in a minority.
I think that it would be misguided to say that when you are young, retirement is a “dirty” word – but it is more commonly not discussed, considered or more importantly perhaps – planned for. As for some strange reason it would appear to be human nature, to worry about these things when you are “Old”, or at the very least, approaching “Old”.
Well, in the wise words of a certain former Top Gear Presenter, it is time to “drop the bombshell”, as we all start young, and we sure as hell all get old! So why not spare a moment or two to think about what you would like your life to look like say, post 50 years of age (as far away as that might be today!). Sure, you might be paying into a pension right now, and you might even have some savings put away for a rainy day – but have you given some thought to the growth and value of your business as part of your retirement plan?
I realise of course that there are some people who never wish to retire, and see continued employment in their own business as their pension plan. But unforeseen and life changing events, such as serious illness or impairment, divorce or premature death could all render our “best laid plans” redundant, and grossly affect the future that you have worked hard for. So before I start sounding too pessimistic, may I suggest that you consider the following essential but basic points sooner rather than later, as I will personally guarantee it will make your future life a whole lot easier.
Premature Death – Prepare a Will, and make sure you keep it updated. Also, make sure that your executor and/or solicitor have a reasonable understanding of your financial affairs.
Unforeseen Circumstances – Make sure that you have an up to date Partnership Deed or Shareholders agreement that has provisions that cover death, illness, retirement and most importantly sale/exit for both you and your Partners/fellow Directors.
Retirement Planning – Plan and grow your business with half an eye on how and when you might exit or retire. See the sale of your business at some point in the future as part of your pension plan and make important strategic decisions for your business accordingly.
Succession Planning – It may well be that you wish to pass your business on to your children or be bought out by your fellow partners or directors – either will have different legal and tax implications, so give some thought early and be open to advice, so that you choose the right pathway for your circumstances.
Insurances – Did you know that it is significantly cheaper to take life insurance (and some other forms of insurance) when you are in your twenties or thirties than when you feel that you might require it in your forties and fifties? So take advice early and select what is sensible for both you and your family’s needs.
You may choose to take heed or not – but I have specifically written this article, because in my work as a management consultant and business broker, I come across clients in complex and stressful situations where their difficulties could have so easily been prevented with just a little more foresight and planning. So boring it may be, but I know from everyday experience how essential it certainly is.