Why Must Business Owners Have An Exit Strategy And Retirement Fund For Their Old Age

Retirement is an inevitable reality, but many business owners do not consider retirement, as they either never completely retire from the business and simply pass on the own business to their children, often relying on the income generated from the business for their livelihood in old age.  

Sadly, many senior citizens often end up not being cared for in their old age. As such, it is important for business owners to have a separate retirement fund that is completely independent of their business. Likewise, they should also have a proper exit strategy in place where they can hand over the reins of the business to their children or sell it off for a handsome sum to further enhance their retirement corpus. 

Reasons For A Strong Exit Strategy And Retirement Fund 

Here are the reasons why business owners must have a strong exit strategy and a retirement fund 

Independent Finances: To have a proper exit strategy, business owners must plan their finances well in advance and also accumulate a corpus that will allow them to live a well-planned future with financial security. 

Having a corpus post-retirement will ensure financial independence and obligation-free financial decision making. Many business owners sell off their company and then use the money to fund their retirement, which is a good idea in hindsight, but might require them to make continuous investment to resolve the problem of cash flow in retirement. If planned properly, this can be a good strategy. 

Maintaining A Good Lifestyle: It is important to maintain a good and healthy lifestyle in old age. Taking preventative measures from physical and mental well-being and cautious measures like systematic check-ups are important.  

Should one become ill in old age, it can be disastrous and put a strain on the finances. Having an exit strategy will ensure that one does not end up overworking in old age. Coupled with a decent retirement corpus, it will also help one relax and enhance the chances of quick recuperation. In many cases, business owners often pass on the business to their children or sell it off in the absence of any successor. In both cases, the presence of a good corpus and a relaxed lifestyle is beneficial to their health in old age. 

Avoids Conflicts: Financial success or even a successful business could have its share of family disputes over the distribution of wealth of succession. While planning retirement, conflicts are inevitable and equal distribution might not be possible. Having a proper exit strategy may include choosing talent or commitment over nepotism. It may also be beneficial to get good value for your business if you wish to sell off your business and distribute the proceeds among your successors.