Is Your Business Your IRA?
According to a 2008 survey conducted by Gallup for Wells Fargo Bank, 90% of small business owners don’t plan on a traditional retirement. That’s up 12% from the 2005 results. The good news is that 40% of business owners plan to keep working simply because they love what they do. The bad news
is that 43% of small business owners think they won’t be able to afford to retire. “Many small business owners choose to work later in life, but increasingly, those who wish to retire are finding it difficult,” says Wells Fargo spokesperson Rebecca Maceiera-Kauffmann. “Small business owners need to plan ahead for retirement years, even if they don’t plan to stop working entirely.”
Many business owners plan to sell the business, invest the proceeds and maintain their lifestyle through a long, healthy retirement. This is common, but dangerous thinking. For this to work, you need two things:
1. Somebody who wants to buy you out
2. A sales price high enough to let you retire the way you want
The first depends on whether your business is valuable without you. If it is, you have something to sell. If it isn’t, you’re basically looking at a real estate transaction. The second depends on your real estate, the goodwill you’ve built up with customers over the years, and the business’ future prospects. Loyal customers and good location make a huge difference in sales price. We recommend realistically estimating your business’ value every few years. It’s not hard, and your accountant, banker, financial advisor or real estate agent should be able to help.
Regardless of how your valuation turns out, business prospects change. More than most, business owners should diversify their assets. Lincoln Financial can help.
Lincoln Financial Securities is part of the Lincoln Financial Group (LFG). LFG is a diversified financial services organization headquarted in Philadelphia with $171 billion in assets under management. LFG offers:
- Life and Long-term Care Insurance
- Annuities
- Individual and Group Retirement Plans
- Group Benefits
- Investment advice and products including stocks, bonds and mutual funds
In addition to his duties at Downing-Childs & Musser, Steve Musser serves as an Investment Advisor Representative of Lincoln Financial Securities, providing investment advice and services to clients throughout Ohio and West Virginia. Whether you’re primarily concerned with capital preservation, tax-advantaged income, wealth accumulation or business continuation… we’ll work with you to develop a strategy that’s as unique as you are.
Contact Steve for a free initial consultation:
740.992.3381 Office
800.454.1096 Toll Free