Retirement Pension for Entrepreneurs
For many entrepreneurs, the bulk of their retirement savings are in their physical business. It is very common for entrepreneurs to plan for a golden parachute or sale of their business upon retirement. All the equity built up would translate into cash for retirement. The problem as we are seeing in today’s marketplace is that entrepreneurs cannot control the economic environment surrounding their business. During the financial crisis, it was estimated that many soon-to-be retirees lost more than half of their life savings. Even worse for entrepreneurs, their savings WAS the equity in their business and they found it extremely difficult to sell.
Within our own accounting firm clientele, we are seeing more and more entrepreneurs struggle to sell their businesses when there is no succession plan in place. Entrepreneurs need to start thinking about retirement savings OUTSIDE of just the equity in their business. Fortunately, investment managers and financial institutions have started offering managed pension plans that are structured to fit the life of an entrepreneur. In Canada, this often includes the use of corporate funds to build up a pension savings much like those of public servants or employees in large firms.
Need more information? Shoot us an email and we will send you the proper information from a Certified Financial Planner.