Plan your new business — before you retireSubmitted by Agrawal Associates on March 8th, 2017
March 15, 2017
When retirement finally arrives, many people look forward to travel, spending time with family, and taking up a long-ignored hobby. There are also a number of Canadians choosing another path; opting to continue working even after they retire from their life-long careers.
For these individuals, a retirement plan might include pursuing passions and business opportunities that they weren’t able to pursue while working a regular 9-to-5 job. If you’re considering starting a business when it’s time to retire from your career, consider the following tips:
1. Make a plan before you retire
If you’re still employed, make your post-retirement business plan now. It’s possible to launch your new business before you retire so you will have a steady source of income in the early years of your new venture.
Consider: Your current employer may have non-compete clauses, or concerns about employees having second jobs. Don’t underestimate the impact your new business might have on your ability to continue to perform at your current position.
2. Talk to your family
Are you and your spouse are on the same page about what your retirement plan means? If you are planning to consult three days a week, while your spouse imagines a little garden on Vancouver Island, it’s good to have those conversations now. Address how you’ll balance those two ideals — before your spouse starts planting! Have a realistic discussion about how long it may be before your business will be self-sufficient and other financial considerations that might arise.
Consider: While you might be in prime health today, your new business could be impacted by a change in your health.
3. Get support
Is your passion-project a meaningful hobby to keep you busy and engaged, or do you need post-retirement cash-flow? As part of the business planning process, determine if you need to enhance your education or credentials, or if hiring experts to help you launch and operate is a better option.
Consider: Your financial advisor should significantly support this process. Find someone who can help you review your financial plan. This process will not only help determine if you can afford to start your business, but also what impact this venture will have on your retirement income and taxation.
4. Find funding
If you start your business while still working, you may be able to raise the start-up capital needed through your existing income. Avoid tapping into your retirement savings to fund your new business; that might just be a red-flag that you’re not financially ready for the new risk.
Consider: There are numerous government-related grants available to individuals starting new businesses. Review opportunities and discuss with your financial advisor which options will best support you, your new business and your long-term financial strategy.
If you are considering trading in your pay cheque for paving your own path, we can help with business planning. We’ll work with you to examine the details of your business to tailor strategies to maximize tax opportunities, manage risk, and address succession planning.