While the sale of your business may contribute to a large portion of your retirement savings, incomes in retirement can come from a number of different sources which may vary over time depending on market conditions and your personal circumstances and investment strategy.
So, before you hang out the ‘For Sale’ sign, there are some important questions you need to consider.
Maintaining the lifestyle you currently have when you are no longer working takes careful preparation and planning and there may be other sources of income that can help you make the most of your retirement.
As a business owner, the sale of your business will likely help fund your retirement, but there are important factors that you need to know before you sell your business.
1. How much will you need to retire?
Have you really taken the time to consider the retirement lifestyle that you would like to enjoy and what it will cost to achieve that lifestyle? And, will the value of your business match the retirement funds you will need? Put simply, an $1,200,000 sum returning 5% equates to an income of $60,000 per annum… Will that be enough?
2. What’s happening in your business?
Have you sought professional advice to estimate what your business is worth? If the likely sale price is less than you were expecting, you may need to look at ways to increase the value of your business before you sell and retire. We can help you to make the most of opportunities and identify areas for business improvement, as well as get your books in order to assist potential buyers with their due diligence. We can also help you understand your options and guide your decision making when it comes time to selling.
3. What’s happening outside your business?
Have you considered what’s happening in the market? Is it a buyers’ market or are there good opportunities for selling? We can help you prepare for your business to respond to the market and stay ahead of the game and help make your business more saleable.
4. What are my other income options for retirement?
Your income in retirement may come from a number of sources including superannuation, investments outside of super such as shares and property, part-time employment, pensions or part-pensions, releasing home equity or selling your family home. There are benefits and risks associated with each different income option, as well as tax implications, so it’s important to seek professional advice to develop an appropriate mix of income streams aligned to your circumstances and retirement lifestyle goals.
We help our clients identify opportunities associated with super and other appropriate approaches for achieving passive income streams so that you can plan for the retirement lifestyle of your choice.
If you would like to discuss life after business in further detail, or would like a second opinion, we encourage you to make an appointment. Contact us today on 03 9708 8801 or email info@rvpartners.com.au
Life after Business
Article #1: ‘Life after Business’ – CGT concessions and selling your business
In our next ‘Life after business’ article, we focus on getting your business ready for sale.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
[1] ABS 3101.0 Australian Demographics Statistics June 2014
[2] https://treasury.gov.au/sites/default/files/2019-03/2015_IGR.pdf
[4] https://treasury.gov.au/sites/default/files/2019-03/2015_IGR.pdf
[6] Household Income and Wealth, Australia, 2017-18, Australian Bureau of Statistics.
