Rick Kozlowski

Rick Kozlowski

(802) 864-5756

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Retirement Issues for the Closely-Held Business Owner

Your retirement plan needs to reflect the realities of your lifestyle and your business: How much do you need to retire? When can/should you business be transitioned? What after-tax value can you expect to receive from the business? The answers to these questions will help you clarify your goals. The key to intergrating the transition of your business with your retirement plan is timing and value -- when can you transition, and how much do you need to realize from the transition to fuel your retirement?

How Much Do You Need to Retire? This is a complex question that incorporates your planned retirement spending, income from investments and social security, and the value you receive for your business. Although complicated, retirement planning boils down to a mathemetical exercise: plotting the sources of retirement income against expected retirement expenses (as well as other financial goals: travel, a second home, legacies for children, etc.). A good financial planner will be able to help you map out source and uses of funds, and determine the extent to which the value of your business plays a role in your retirement plan. This exercise is critical part of understanding the role your business will play in your retirement plan -- without a solid financial analysis, you may be simply guessing. [A good financial planner is part of the team concept discussed in Creating a Plan].

When Can/Should Your Business be Transitioned? The timing of your business transition will depend on the outcome of your financial plan. If you have accumulated significant assets outside of your business, you may have the luxury of transitioning your business at any time. If your financial plan indicates that the value of your business is critical to your retirement goals, you may need to delay retirement. Another factor that may effect timing is the economy -- you may be ready to transition your business and retire, but the market may indicate wainting for a better time to sell. All of these considerations can affect the timing of your transition out of your business.

What After-Tax Value Can You Expect to Receive from You Business? Many business owners do not have a realistic value of their business. They may be conservative, not realizing the value they have built up over the years. Others may be optimistic -- believing that they can obtain top dollar at any time. Here, again, the team concept is invaluable. A good business valuation expert can provide you with a realistic, up-to-date indication of the value of your business. This expert can assist in helping you maximize the value of what you have created, and ultimately play a role in the transition process. Obtaining a professional opinion of your business is another critical part of the transition process.

What is the Next Step? Planning in advance -- a good rule of thumb is to begin the process at least two years in advance of your retirement. Begin by identifying and quantifying your goals. Assemble a team to help you analyze your situation and create a plan, and then execute the plan.

I can help you get started. If you would like to discuss your business and your goals, please contact me.




Types of


a Plan