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5 Common Regrets of Business Owners in Retirement

5 Common Regrets of Business Owners in Retirement

| December 23, 2021
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Retirement is something you’ve worked hard for and looked forward to, likely for your entire career. But what happens when you get to retirement and it’s not all it’s cracked up to be? Have you considered the idea that you could experience regret about how you spent your working years or the amount of effort you put into your retirement plans? 

Retirement is one of life’s greatest milestones and, as a result, many pre-retirees are worried about making the leap, asking themselves, “Have I saved enough money?” or “Will I be able to maintain my current standard of living?” But when you are a business owner, you have even more riding on your shoulders. Here are five common retirement regrets business owners face to keep in mind as you prepare for your golden years.

1. Not Spending Enough Time With Family

The day-to-day tasks of running your business probably keep you busier than you can handle, but you don’t want to wait until retirement to invest in the people who are most important to you. Your family is the reason you work so hard, so make sure you find a work-life balance before you retire so your relationships are still strong when you reach this milestone.

2. Putting Off Retirement Planning

Many business owners see their business as their retirement plan. They invest a significant amount of their personal assets into the company, and when profits roll in, they keep building the business. But you need to think of your future as well. If you don’t plan for retirement now, will you be able to afford to retire down the road? Even if your business is profitable and you plan to retire off the proceeds when you sell it, you still need to save and plan.

Additionally, the pace of change in many industries is increasing rapidly, and technology makes many products and services available directly to consumers in more cost-efficient and convenient ways than some traditional businesses can provide. While companies in particular industries may have residual value today, in the coming decades, any potential sales proceeds could be reduced or eliminated as industries evolve. As a result, it is becoming more important for business owners to not put all their eggs in one basket—an eventual sale of their business—and to make sure they have diversified investments in retirement accounts and a taxable investment account to provide for themselves and their families in retirement.

Planning early and adjusting as needed is the best strategy, especially for business owners who have a lot of their net worth tied up in their companies. Don’t put retirement planning off until it’s too late. Work with a financial professional to create a sound retirement plan and diversify your net worth so it isn’t all tied up in one place. 

3. Failing to Create a Succession Plan or Exit Strategy

Every business owner needs a succession strategy or exit plan. Whether you want to sell or pass your company on to family members or key employees, a well-thought-out plan is necessary if you want top dollar and a smooth transition. A knowledgeable financial advisor can provide an objective perspective that is vital to strategizing the optimal plan and weighing the different options that are available.

It’s critical that you start thinking about how and when you may want to leave your business, and make necessary preparations and process improvements so that you receive the highest price possible. Having a strategic transition plan will make your company more appealing to buyers who want assurance that it will continue to thrive without you. Even if you’re passing the business on to family members, you need a plan in place to ensure that it continues to prosper and all family members are treated equitably (which may not necessarily be equally).

4. Not Planning for Your Free Time

Free time is a major perk of retirement, especially after decades of pouring yourself into your business. But going from working full-time to not working at all can be a shock to your system. Saying goodbye to your business, your employees, and your routines can cause anxiety and depression. However, if you plan ahead to fill your time with activities that will fulfill you, you can avoid the negative emotions that can come with this life transition. 

Do you want to know what activities result in a fulfilling retirement? The general consensus is to stay busy, social, and active and pick up a hobby or learn something new. A study looking at boredom in retirees found that 33% attributed this boredom to repetitive days. (1) The takeaway here is to be intentional with your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details to make it happen. It’s easy to lose your identity when you close the door on your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.

5. Going it Alone

It’s no secret that being a business owner complicates life and finances. On top of saving for retirement and taking care of your family, you also have employees to think about and tax considerations. You are in a unique situation and would benefit from working with someone who specializes in serving business owners. 

At Nichols Financial Strategies, we help business owners find clarity and confidence in their wealth management plans. To learn more about our wealth management strategies designed to help business owners, reach out to us at 559-440-6999 or by email at matt@nfstrategies.com.

About Matt

Matthew Nichols is founder, CEO, and wealth advisor at Nichols Financial Strategies with more than 20 years of experience in the financial industry. He spends his days serving business owners and families, specializing in helping those in the agriculture industry proactively prepare for the unique challenges they face in a rapidly changing economy. Matt is an Accredited Investment Fiduciary® (AIF®) professional and holds his FINRA Series 7 and 63 securities registrations with LPL Financial and his California State Life & Health Insurance license. He’s also pursuing his ChFC designation and is dedicated to continuing his education and staying abreast of the latest financial trends and strategies. Matt’s mission is to help his clients transfer wealth from one generation to the next and work toward achieving their goals so they can spend more time on what they love most. Matt was born and raised in the California Central Valley and resides in Fresno with his wife, Christy, and their two daughters, Holly and Jillian. He enjoys golf, traveling, skiing, and spending quality time with his family. To learn more about Matt, connect with him on LinkedIn.

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(1) https://www.lovemoney.com/news/62595/what-to-do-in-retirement-ideas-hobbies-work-volunteer-money-happiness

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