Why directors and business owners fail to plan their retirement

Date Published: 17/02/2020 10:25

In our experience company directors and owners of SMEs are so wrapped up running their business that they often forget their own financial planning – or simply don’t see it as a priority.

So why do so many directors fail to plan their retirement? Over the years I’ve probably been given half a dozen answers when I’ve asked that question. Here is a list of common excuses I’ve heard, and why they don’t stack up!

“I haven’t got time.” 
The simple fact is that no one ever has time. And yet planning your retirement is one of the most important jobs you’ll ever do. As the old saying goes, a director or owner of a small business will either walk out of his business or be carried out of it. Assuming your preferred course of action is the former, there needs to be enough money waiting when you do eventually walk out – and the only way you can make sure of that is to plan for it.

“It’s too early/too late.”
It’s not too early if you’re in your twenties and it isn’t too late if you’re in your sixties. We know that in your twenties you’re working all the hours in the day to build your business: but trust me, you will get older more quickly than you think. Obviously, it’s easier to achieve savings targets if you have more time but there is need for financial planning at all ages because personal circumstances and financial planning goals are always changing.

“I’m going to keep working.”
There seems to be a trend amongst some business owners to declare that they’ll never stop working. Unfortunately, your health, your family and your competitors may eventually play a part in this decision. In our experience, there comes a time for every entrepreneur and director when ‘enough is enough’ and when that time comes it needs to have been planned for.

“It’s boring/not worth it.”
In some ways this is one of the easiest objections to understand. Many directors and entrepreneurs have seen their own parents dutifully save for retirement and then not be very well off when they do finish work. Unfortunately, everyone now working faces a very simple fact: the population is getting older and the Government simply won’t be able to fund the retirement you want.

“The numbers are too big/too frightening.”
Sadly, this is a reflection of proper financial planning. If we’re going to plan for the retirement you really want, the numbers will be big, and they will be challenging. But there is no point in preparing a financial plan which provides less than you want – and it’s surprising what can be achieved if you save consistently and keep your savings and investments under regular review.

“My business is my pension.”
Despite the fact that virtually no businesses are sold at exactly the right time for exactly the right amount of money, many business owners still say this but you also need to build cash outside your business as well. That’s what gives you choice and allows you to dictate the timing and the quality of your retirement.

We’re always happy to talk about a client’s retirement planning. It makes sense to explore the options: we promise you that it isn’t too late, and we’ll do our best not to be boring! If you need help to plan your retirement, get in touch.

No individual investment advice is given, nor intended to be given in this article and liability will be accepted in respect of any action you may take as a result of reading this article. If you are unsure you are urged to take independent investment advice.

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