As you begin to think about exiting your business and redefining yourself, here are some common mistakes to avoid.
1. Exiting Before You’re Ready. Exiting from your business early may seem like a status symbol, signaling your financial success. But that doesn’t mean it’s the right thing to do. Make sure you have considered all of the business, personal, financial, estate and tax issues. You might consider consulting with a Certified Exit Planning Advisor (CEPA) who is trained to help you wrestle with these issues.
2. Locking Yourself In. For many boomers, retirement is the first time in their adult lives to be their own bosses—that is, if they choose to. While planning what you want to accomplish in retirement can be exciting, it can also be scary. The choices can seem overwhelming. While you should have some sort of retirement-life plan, it doesn’t have to be carved in stone. Consider breaking up your retirement plans into small, bite-size pieces. Think of your retirement in two-year blocks and plan two years out.
3. Failing to Communicate Your Dreams to Loved Ones. Spending decades of your working life with a spouse or significant other doesn’t necessarily mean you’ve shared all your thoughts and dreams about retirement. You might consider sitting down with your spouse to write down list of retirement goals—separately. When you compare them, you might find that the two lists look very different. Then the challenge is to find middle ground that leaves both feeling they will have a retirement they can look forward to.
4. Leaping Before You Look. The retirement dreams and reality often clash. “What you enjoy during a 10-day vacation isn’t necessarily what you’ll want from 20 years of a retirement,” points out Peter Christman, the CEO of the Christman Group. The same rules apply to retirement careers. Whether you plan to start a business or move to Italy, it’s a good idea to test-drive your plans before you begin. Work in a similar business for a few months before making the leap. Or spend a few months in Rome before you buy that villa.
5. Overestimating Value. You’ve built up a nest egg, but a significant percentage of it is probably tied up in the value of your business. Make sure you understand the value of your business before you do any financial planning. A survey by a national business valuation firm found that over 50 percent of business owners overestimated the value of their companies. A great financial plan based on an incorrect assumption can do a great deal of harm. Have your business valued by an experienced valuation professional, and then discount the results in your financial planning models. It’s important to be conservative when you’re planning the financial security of you future.
6. Don’t Count on Consulting. When it comes to pondering a post-retirement career, the field of consulting is a perennial favorite. But how many newly minted consultants does the market really need? If you’re expecting a consulting business to help pay the bills in retirement, test the waters before you dive in.
7. Overdoing It. Many boomers may want to avoid the unfulfilling years of leisure lived by their parents in retirement. But it’s possible to veer too far in the other direction as well. Make sure your life is balanced and addresses your all of your physical, spiritual, and mental needs at the same time.