Tuesday, September 22, 2009

Are You Prepared for Retirement?

If you are a small business owner, the answer to this question may be a resounding "no." In studies conducted recently by the Royal Bank of Canada (RBC), the RBC surveyed small business owners across Canada. Almost a quarter of small business owners expressed a desire to retire within the next five years. However, only a small number are properly prepared or have any idea what the impact will be.

One of the primary stumbling points for retirement planning by small business owners is the question of succession planning. In the business world, transfer of the company to the next generation within one's family is most common. Only a third of small businesses survived succession to the next generation and only one third of these businesses were then passed on successfully to the grandchildren.

It is not always a question of poor planning. It may be that one's children are not qualified to take over the helm of the family business. Or, on the other hand, they may simply not be interested.
Sometimes, the founder is the business. Remove that dominant figure and the business ceases to exist. If one built a business and failed to make financial plans for leaving the business, he could face serious financial problems should the business cease to function.

The RBC study revealed that 62 per cent of small business owners in Canada were age 50 or older. This translates into a large number of future retirees in the next decade that must start planning for the golden years as soon as possible, if the transition from business owner to retiree is to be smooth and well provided for.

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