Retirement Planning

I recently listened to a retirement planner who asked the group what they thought “retirement” actually meant. He let us discuss a variety of ideas, and then provided us with his working definition: “Retirement is when you do not work because you have to, though you may work.” His concept is that – at some point – many people do not need to work in order to meet their financial needs, but they may work to satisfy other needs.

Working with family businesses, the issue of retirement planning can be complicated by other factors. Often, the entrepreneur has a significant amount of their wealth tied up in the business, which they need to “unlock” for their retirement funding needs. This can happen through the immediate sale of the business, or some assets (such as land or other holdings), or payments over time for the company as it transitions to other hands. How this value is unlocked is often driven by factors such as tax planning, ability of the new owners to pay, nature and structure of the business, and so on. Planning this carefully can help create comfort about financial security going forward, and is worth doing well, in concert with other advisors (accountants, lawyers, tax planners, wealth planners) as well as the family, on a holistic basis. We see too many issues arising from a failure to engage all the needed participants early.

While the complexity and uncertainty of forward planning through retirement from a financial perspective can be challenging, the personal side of “what will I do?” can be just as daunting for many. I regularly talk with business leaders facing some version of retirement, and a common theme that emerges for many is a lack of clarity around purpose once the business role changes or ends, and a degree of fear as that uncertainty looms up after so many years of defining themselves by what they do. There do not appear to be any shortcuts here. Thinking and working through the “next season” takes energy and time.

Sometimes I hear someone with a quick answer to “what will you be doing?”, such as I am going to play a lot of golf (or travel, or other recreational activity).” Spoiler alert – most purpose-filled business leaders find endless recreation quite empty fairly quickly. They have spent a lifetime as driven entrepreneurs, and though they long for less pressure and complexity, a full scale retreat to the beach doesn’t have the level of intrinsic reward that most of them need. It is vital that those planning to retire take time to build a plan going into the new period that makes sense and has a high degree of success.

Of course, it goes without saying that also planning for business leadership needs is also critical, if the leader will be stepping away from a major role they have been playing. This is true whether they plan to exit entirely, or even go part time (in fact, it is especially important if they plan to stay in the business in some fashion). Defining their new role, finding places they can add real value, and communicating clearly about the changes can make all the difference in terms of their success moving forward, and also for the business and rest of the team.

Taking time, and using a thoughtful and holistic process to consider all of the impacts of retirement – financial, work, relational, purpose, time, and so on – can make all the difference as leaders step forward into what should be the “golden years.” Doing it right can result in a truly purpose-filled, and happy retirement.