As people approach retirement age, two fundamental questions can result in a little anxiety and hand wringing.  What if I out-live my retirement funding? and Now what am I going to do?  Even if you love your career, many industries have mandated retirement ages.  Many people find themselves with a “forced” question of retirement as employers downsize, offer attractive early retirement options, or just close the doors.  Hopefully, we will all be faced with the” Now what?” question.  Rather than getting stressed with the question, view it as a successful milestone.   It’s a good thing to be at this point in your life.

Habit and Identity of Work

We are all creatures of habit to some extent, and one of the strongest habits we’ve acquired is going to work. The thought of that stopping has a significant pucker factor. Even while you want to slow down, have fewer responsibilities for others, more time with your family, and no schedule to keep, there is usually a desire to continue contributing to mankind for the rent of sucking air while still on this earth.  When you meet someone new, the conversation often goes to “What do you do?” in the first minutes of the relationship.  I’ve met several retirees who are apologetic for the lack of an answer to that question.  Most people have a need to be productive.  We’ve had years of our identity being associated with our role and career. Now what do we do?

A Solution to Both Problems

Fortuitously, the desire for additional income to help the retirement funding and the desire to be productive in our retirement years can be addressed with the same solutions.  Re-entering the employment population, or owning your own business.  Both solutions have pro’s and con’s, but many retirees find themselves for the first time in their lives with the ability to do that one thing they really have wanted to do by owning their own business.

Purchasing a business can be a great option.  If you know what you want, there will probably be multiple options for you to choose from.  You can determine the investment and your ongoing management structure you would like ahead of time. You can be your own boss and determine your own destiny.   One of the disadvantages of starting your own business late in life is that you have less time available to get a return on your investment.  Starting a business from scratch can be risky, slow to cash flow and require more of your time and effort just to get it off the ground than desired.  Purchasing a business with ongoing operations, can be profitable from day 1 with ready made customers, and processes. 

Tips for purchasing a business in retirement:

1. Start early. Purchasing a business is not something to do on a whim.  Do your research and make your plan.
2. Know yourself and your goals.
   1. What do you enjoy? What have you always wanted to produce?
   2. How much can you invest comfortably?
   3. How much time do you want to invest comfortably?
   4. How much income do you need from the business?
   5. If you’ve been an employee your entire career, can you successfully transition to an ownership mentality?
   6. Do you like to learn new things? Many times, the older we get, the more opinionated (a politically correct term for “stubborn”) we become.  Can you be open minded to change if something isn’t working?
3. Work closely with your CPA in the early planning. There are options for funding a business with retirement funds and the tax advantages of owning a business can be significant if the business is structured correctly. Plan for your exit from the business as well.  Your exit will probably come sooner than younger entrepreneurs.
4. Work with a business broker that really listens to your goals and desires to help find and close on the perfect business for you. At Transworld, that is our passion.  We can help.

Retirement can be a little scary with the unknowns, but so were kindergarten, graduation, weddings, and all the other “first time’s” you have survived. Have fun! Purchasing a business can be a great chance to earn extra income, and provide a purpose while doing something you enjoy in your retirement.