{"id":2468,"date":"2025-03-11T13:23:02","date_gmt":"2025-03-11T17:23:02","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-eu\/2018\/01\/28\/retirement-planning-for-business-owners\/"},"modified":"2025-03-11T13:23:03","modified_gmt":"2025-03-11T17:23:03","slug":"retirement-planning-for-business-owners","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-eu\/insights\/retirement-planning-for-business-owners","title":{"rendered":"Retirement planning for business owners"},"content":{"rendered":"\n

To achieve success, business owners often devote most of their time and energy to securing the future of their companies. However, they can often neglect their own financial futures in the process. As a result, some business owners may be unaware of just how much preparation and planning it takes to ensure a comfortable life in retirement.<\/p>\n\n\n\n

\u201cBusiness owners tend to pride themselves on being in control and aware of business trends, but often overlook personal financial planning,\u201d says Samantha Brown, director \u2013 Relationship Management, at RBC Wealth Management in the British Isles. \u201cIt\u2019s this focus on the business that leads to a lack of preparation for life after work. For most business owners, they say their business is their pension, so they\u2019re totally reliant on its sale to fund their retirement.\u201d<\/p>\n\n\n\n

While selling the business might be a viable solution, the concern is that those without a clear wealth plan could find themselves working longer or living more frugally in retirement than they had hoped. \u201cSome business owners never plan to stop working, but the prudent advice is to prepare for possible retirement,\u201d Brown says.<\/p>\n\n\n\n

Plan for a future beyond the business<\/h2>\n\n\n\n

For some, retirement may be an unexpected decision, prompted by family or business events or even health reasons. It\u2019s this uncertainty that makes early planning essential to understand what retirement might mean for you and your business. This includes making decisions on whether, and when, the business will be sold or transferred, in addition to plans for setting money aside for yourself, your family and any philanthropic intentions.<\/p>\n\n\n\n

Given that many people want to maintain the same lifestyle in retirement as in their working life, income needs can often increase during the early years after finishing work as people go on holiday while they\u2019re still physically active.<\/p>\n\n\n\n

\u201cIt is about structuring your assets so they pay for the lifestyle you want,\u201d says Gavin Smith, associate director \u2013 Relationship Management, at RBC Wealth Management in the British Isles. Depending on which arrangements are already in place \u2013 such as salary and bonus packages, share and deferred compensation schemes<\/a>, as well as life insurance and medical plans \u2013 making the most of your assets is not always a straightforward process.<\/p>\n\n\n\n

As a first step, Smith says business owners should consider setting up their own pension plan, just as they would for their employees. Pensions are frequently a small component of an overall wealth package, but this doesn\u2019t mean they should be overlooked. Indeed, it\u2019s important to understand how they work and use them where appropriate.<\/p>\n\n\n\n

\u201cMany of the business owners we support are financially well off and don\u2019t need their pension benefits, therefore they think they don\u2019t have to worry about it. But what they don\u2019t think about is that they can use them to help their family,\u201d says Smith. \u201cWhile the business might be the primary source of wealth, it\u2019s wise to have at least two options: the business and a pension on the side.\u201d<\/p>\n\n\n\n

In certain pension arrangements, such as small self-administered schemes (SSASs), it\u2019s possible to buy bricks and mortar commercial property that can provide an attractive income stream. The scheme can also provide loans to the business, which can be beneficial if bank lending isn\u2019t available.<\/p>\n\n\n\n

Within a family business, however, selling up to fund retirement isn\u2019t always an option. For example, you might choose to transfer or gift the company to a child or other family member, with the option to retain shares or draw income as an employee or consultant to help fund your retirement.<\/p>\n\n\n\n

But not all children might want to continue with the family business, triggering further conversations around wealth transfer and succession planning.<\/p>\n\n\n\n

Make use of all your wealth planning options<\/h2>\n\n\n\n

Retirement planning means taking a holistic view of your financial affairs to try to anticipate any future problems and how they can be solved. Three key questions to consider are:<\/p>\n\n\n\n