Three "Lifes" in Your Retirement Plan!
So, you have had a successful business career. You have built a successful business that has generated a great income for you and your family over the years.
One or two of your children are groomed to take over and run the business and you are planning an Estate Freeze to pass on the future growth to them. You have built up large balances in your and your spouses' RRSPs and with sale of the business you should have ample capital to fund your retirement.
Life looks good-time to consider the 3 "Lifes" in your Retirement Plan.
Life-style, Life Income and Life Boats!
Your business has been able to provide you with the toys to allow a great life. But those toys were things that you used in your "leisure" time. The boat, the motorhome, the golf course. But now that you are in retirement mode, it is all "leisure" time. Most of the successful business owners that I know aren't anxious to have nothing but "leisure" time. Their working life was filled with meaning and structure. Make sure that, as you think about retiring, you think long and hard about how you are going to spend 24/7 of "Leisure" time. This is your Life-style.
2. Life Income
Most of us have become accustomed to having a regular amount of money on a regular basis to fuel our lives. But the biggest concern of self employed business owners who have accumulated a large amount of capital, is the concern of outliving that capital.
Market downturns, at a time when one starts drawing income from that capital, can have a devastating effect on how long the money will last. A couple, each 65 and retiring today have a huge chance of needing income for one or both of them beyond age 90. You don't want to find that there is "too much life at the end of the money"!
3. Life Boats
As with the question of providing life income, the issue of people living much longer has fueled a great concern that one will have a need for some kind of "care" in their later years. And care costs money! Even a Government subsidized care facility in B.C. can cost over $2000/month. Private facilities cost much more.
Providing Home or Facility care for one spouse can eat into the retirement nest egg very quickly and jeopardize a couples "life income". A "life boat" of Long Term Care Insurance can go a long way to easing the burden.