Make Your Retirement Bulletproof

Make Your Retirement Bulletproof

You’ve built a successful company. You’ve found a buyer. You made the deal and signed. You cashed the check. Now, you just need to survive off of that money for the next several decades.

Worried about what comes next, money-wise? That’s understandable. 67 percent of small business owners worry they won’t be able to put away enough money for retirement. That’s compared to only 38 percent of non-business owners!

Start with the three steps below to protect the wealth you accumulate after the sale of your business:

1. Establish a Bucket System

• One of the main things to protect your wealth against is actually yourself! I’ve written before about the benefits of establishing a bucket system for your sales cash. (Out of the Game: How to Stay Happy and Busy Beyond the Sale) Immediately put 50-90 percent of the funds from your liquidity event into your living expenses/savings bucket. Do what you will with the rest (eg: investing in a new business), but don’t touch your savings for risky or business-related expenses.

2. Set Up an SEP or Pension Plan

• Set up and make regular contributions to a qualified, tax-deferred retirement account like a Simplified Employee Pension (SEP) in order to avoid an income fallout after retirement. This will allow you to save more than $50,000 per year. A pension plan will let you have savings of more than $100,000 per year, allowing you to supplement any income you receive from selling your business.

3. Hire a Financial Advisor

• I dedicated an entire chapter of Walk Away Wealthy to the importance of CFP professionals—and for good reason.
• CPAs and investment bankers may come and go, but your financial advisor can work with you for decades—before, during, and for long after the sale of your business.
• Look for someone who offers both investment management and wealth management. Hiring a CFP professional under the RIA (registered investment advisor) umbrella is the way to go. This way, your advisor will be legally bound to do what’s in your best interest at all times—unlike financial advisors working under the suitability standard.