5 Common Retirement Regrets for Business Owners
By Kaylin Fitzsimons
If you’re like most people, you’ve likely been daydreaming about your retirement years for the past couple decades. But what happens when you get to retirement and it’s not all you imagined it would be? I’m willing to bet that your retirement daydreams didn’t include you regretting your decision to retire—but it does happen.
As one of life’s greatest milestones, many pre-retirees worry about making the leap into retirement. They wonder: Have I saved enough money? Will I be able to maintain my current lifestyle?
But as a business owner, there’s even more riding on your shoulders. In our experience working with business owners, we’ve seen 5 common retirement regrets they face. It would be wise to keep these in mind as you prepare for your golden years.
1. Paying Too Much Tax by Not Proactively Planning Lifestyle Needs, Retirement Income & Estate Taxes
Being a business owner simplifies and reduces the amount of tax you pay if you focus on using your business as your principal tax shelter. The conventional wisdom to pay off your house mortgage can cost as much as $1,000,000 to $2,000,000 of lost corporate assets. These additional assets can enhance your lifestyle now and fund your retirement later. As well, these additional assets can fund your corporate-owned permanent life insurance at a younger age when it is more affordable and you are more likely to be insurable.
With planning early, it is possible to pay little or no estate and probate taxes.
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. A recent survey showed that 42 percent of Canadian small business owners are unsure about their future and their plans for retirement. With retirement right around the corner, the last thing you want to experience is uncertainty.
Planning early and adjusting often 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
While every business owner needs a succession strategy or exit plan, 36 percent of Canadian business owners make the mistake of planning to work until they fall ill. Whether you want to sell or pass your company down to family members, it’s critical to start those conversations now. For high-net-worth business owners, 34 percent are concerned that their heirs won’t want to take over the business. Start thinking about how and when you may want to leave your business and what you can do now to prepare so 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 equally. Don’t wait until the last minute to take care of this important step.
4. Not Planning for Your Free Time
Free time is a major perk of retirement, especially after decades of pouring yourself out for your business. But when you go from working full-time to not working at all, it can be a shock to your system. Saying goodbye to your business, your employees, and your routines can cause anxiety and depression. But 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.
Achieve a more fulfilling retirement by staying active, pursuing new hobbies, or volunteering, which has a multitude of health benefits—such as broadening your social network, keeping your mind engaged, and even lowering blood pressure.
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. 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 into 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.
At Lifecycle Wealth, we help business owners find clarity and confidence in their Lifecycle Wealth Plans. To schedule an appointment to discuss your specific situation or get answers to your questions, you can reach me by phone at 416-792-2333 or by email at kaylin@lifecyclewealth.com.
About Kaylin
Kaylin Fitzsimons is an Insurance Advisor at Lifecycle Wealth, providing tax-efficient insurance solutions to high-net-worth professionals and business owners in Ontario, Canada. She is also an investment advisor at Mandeville Private Client Inc., which allows her to offer a wide range of investment options to her clients, including private and alternative fund solutions. Kaylin is focused on using insurance to add value to her clients’ lives and designing investment portfolios that allow her clients to minimize taxes. Kaylin is dedicated to helping her clients save money, make the most of their hard work, and experience confidence that their businesses and families are protected through tailored strategies.
Kaylin graduated from Western University with a Bachelor of Management and Organizational Studies. In her free time, she enjoys cooking or visiting her favourite restaurants, traveling, and learning about different cultures. To learn more about Kaylin, connect with her on LinkedIn.
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