The 3 Stages of Retirement Planning for Entrepreneurs

Track Running lanes 1, 2, and 3. Representing 3 stages of retirement planning for entrepreneurs

By Kevin O’Conner, Financial Advisor

No matter what stage of life you are in or how long you’ve owned your business, it’s always wise to be thinking ahead to retirement. While there are some small business owners who say they don’t ever plan to retire, we know many business owners look forward to the day when they will no longer have to work.

We understand that, as an entrepreneur, you are quite busy running your business and it can be difficult to pause and consider when that won’t be the norm. But, in order to have a smooth and successful retirement, you need to start planning today.

Retirement unfortunately isn’t as simple as waking up and deciding that today is the day to retire. It takes years of planning and preparation, especially for small business owners. What will happen to your business when you decide to retire? Have you saved enough to maintain your current lifestyle, or pursue the interests you’ve put off while running your business?  

We want our clients to have the retirement they’ve always dreamed of. In order to reach your retirement goals as a small business owner, it helps to break down what you should be doing into three stages – early planning, mid-stage evaluations, and final preparations.

Stage One – Early Planning

Define retirement goals. If you haven’t already done so, this is the time to set your retirement goals. At what age do you want to retire and what does retirement look like for you? Estimate how much income you’ll need to maintain your current lifestyle. Perhaps you plan to travel more in retirement, or take up a new hobby, so factor in those additional costs. Also, be sure to consider that certain expenses, such as health care, will cost more as you age.

Protect your assets. Now may be the time to purchase insurance to cover long-term care, as well as life insurance policies or other insurance coverages that can help mitigate risks and protect your assets in your retirement.

Open retirement accounts. If you tend to invest all your money back into your company, this is the stage where you need to investigate various retirement plan options, such as a Self-Employed 401(k) , a SEP IRA, or a SIMPLE IRA). The majority of small business owners have a retirement savings plan, but if you are among the 34% who don’t have one, it’s not too late to start. The earlier you begin contributing to a retirement account, the more time your money can grow. Plus, these accounts help minimize your taxes.

What will happen to your business when you retire? For small business owners, retirement isn’t just about saving money. You also must consider what will happen to your company once you retire. This is an essential step for all business owners, and one they should take as soon as possible. Does a child plan on taking over the business, or is there another internal successor? Do you want to sell your business? Begin to outline what you want to happen to your business and when so that you have plenty of time to execute the plan.

Stage Two – Mid-Stage Evaluations

Evaluate your savings plan. Are you on track to hit your retirement savings goals or do you need to increase the amount that you contribute to your retirement savings plan(s)? If you aren’t already contributing the maximum to your retirement accounts, start doing so during this stage.

Diversify. Consider investing in other assets or investments during this stage. Since you are still likely 10 years (or more) away from retirement, you may be less risk adverse right now. We encourage you to fund your retirement from multiple sources of income. You want to make sure that you haven’t tied your entire retirement future to the profits from the sale of your business.

Begin implementing your succession plan or exit plan. This middle stage of retirement is when you want to begin to establish an exit strategy for success. If you want to have a family member or current employee take over the business, it can take years to train that person and ensure that they can lead the company and run it properly. You may discover that a certain person isn’t the right fit to take over. It’s better to come to that realization earlier than later, giving you plenty of time to find a new successor.

If you intend to sell your business, this is the time to determine its value and ensure that it is attractive to potential buyers. Make sure you have the right people in place to manage the business and keep operations running smoothly.

Working with a financial advisor who understands the issues facing entrepreneurs and who has experience in exit planning can help your business receive what it’s worth (or more) in a sale while minimizing taxation.

Stage Three – Final Preparations

Reevaluate your investments again. Now that your target retirement age is almost here, it may be time to diversify your investments again. Your strategy may need to change based on your lifestyle requirements and market conditions. As you get closer to living on your investments (and no longer drawing a steady income from your business), you’ll need to adjust your allocations based on risk.

Wrap up your succession plan or exit strategy. Whether you have a successor in place or are eyeing a buyer, this is the stage where you take the final steps to complete your plan. Remember, finding a buyer can take time, as can identifying and training your successor, so don’t delay this process. Also, if you sell your business, you may not receive a lump sum of money, but payments spread out over time. Take that into account when developing and executing your retirement savings strategy.  

Don’t dip into your retirement funds just yet. While it may be tempting to pull out some money just before retirement to take a trip or renovate your home, don’t. Keep that money in your retirement accounts so that it’s there when you need it. Look for other ways to fund a home improvement project or trip that doesn’t include dedicated retirement assets.

Meet with your advisor. Even though you’ve been working with your advisor along your path to retirement, it’s wise to meet with your advisor during this stage to make sure you are on track to hit your retirement goals and plan for any tax changes that may come with retirement.

The team at CWO works with small business owners to create concrete action plans that allow them to enjoy retirement without worrying about funding it. If you’d like to discuss your current retirement plan, or need to create one, call us at 770-368-9919, or contact Cliff at or Kevin at

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Kevin O'Conner is a financial planner with C.W. O'Conner Wealth Advisors, Inc. He earned a Bachelor of Business Administration degree in Business Management from Georgia College, and is a Certified Investment Management Analyst (CIMA).

Cliff is the founder and president of C.W. O'Conner Wealth Advisors, Inc. Cliff earned a Bachelor of Business Administration degree in Accounting from Georgia State University.