I am always amazed how many unique and successful businesses there are in Central Oregon. Our community continues to grow as a hotbed for entrepreneurs and when business owners sell their companies, often they stay in the area as it has so much to offer for their retirement years.
Retirement is a significant milestone for any business owner, particularly those with high net worth. As retirement approaches, it becomes crucial to develop a comprehensive and sustainable wealth management plan to secure a financially stable future. A well-designed plan takes into account various considerations, such as lifestyle planning, investment strategies, risk management, estate planning, and philanthropic goals. In this month’s article, I will explore the importance of thoughtful wealth management planning for retiring business owners, offering actionable guidance and real-world examples to inspire and educate readers about the long-term benefits of such planning.
Many successful business owners know what they’re retiring from but many do not have a clear picture of what they are retiring into. One of the key considerations for retiring business owners is lifestyle planning. Before embarking on retirement, it is essential to envision your desired future of purpose and joy and then set realistic financial goals to support it. By assessing current expenses and anticipated future needs, business owners can estimate the required income stream to maintain their preferred lifestyle. This analysis can help determine if additional income sources or adjustments to investment strategies are necessary to meet retirement goals.
Creating a sustainable wealth management plan involves developing appropriate investment strategies tailored to the retiree’s risk tolerance, time horizon, and financial objectives. Very often the investment strategies that enabled you to accumulate wealth may not be the most appropriate strategies to distribute your wealth on a monthly basis in the form of paychecks and playchecks. Retiring business owners should consider diversifying their investment portfolios to manage risk effectively. Diversifying assets across different investment classes as well as diversifying among the different types of taxable accounts (a term I refer to as Diversification 2.0) can provide a balanced approach to wealth preservation and growth and help ensure that you never outlive your resources.
Retirees must also address risk management within their wealth management plan. Unforeseen circumstances, such as health issues, market volatility, and risks such as high inflation and interest rates, can significantly impact one’s financial well-being. Retiring business owners should assess potential risks and implement strategies to mitigate them. Rosell Wealth Management offers a complimentary Risk Audit to help you assess your preparedness for the eight key risks that everyone will face in their retirement years. Regularly reviewing and adjusting risk management strategies is vital to ensure ongoing protection and peace of mind.
Estate planning plays a critical role in wealth management for retiring business owners. Our goal is to help ensure that Uncle Sam does not become the number one beneficiary of your estate. It involves organizing assets, specifying beneficiaries, and minimizing tax liabilities to preserve wealth for future generations. Business owners should consult with estate planning attorneys and financial advisors to create a comprehensive estate plan that aligns with their goals. Elements of estate planning may include wills, trusts, powers of attorney, healthcare directives and business succession plans. By implementing a well-crafted estate plan, retiring business owners can effectively transfer their wealth, minimize estate taxes, and ensure a smooth transition of assets.
Many retiring business owners have a desire to make a positive impact through philanthropy. Integrating philanthropic goals into a wealth management plan can be immensely rewarding. By identifying causes or organizations that resonate with their values, business owners can establish charitable foundations, create donor-advised funds, or participate in impact investing. We have so many wonderful nonprofit organizations in Central Oregon that do so much for our community. Incorporating philanthropy into their retirement plans allows business owners to leave a lasting legacy, help local organizations while maximizing the tax benefits associated with charitable giving.
Real-World Examples and Insights
To illustrate the benefits of thoughtful wealth management planning, let’s consider the case of John, a successful business owner preparing for retirement. John worked closely with us to develop a comprehensive wealth management plan. Through a combination of diversified investment strategies, tax-efficient estate planning, and risk management techniques, John was able to preserve and grow his wealth post-retirement. His plan also included philanthropic goals, allowing him to establish a Donor Advised Fund that supports causes he deeply cares about. By proactively planning, John was able to mitigate taxes from the sale of his company, secure his financial future, enter retirement with significant peace of mind and make a positive impact on several nonprofit organizations in Central Oregon that are near and dear to his heart.
Retiring business owners with high net worth face unique challenges and opportunities when it comes to wealth management planning. These challenges can be overcome with RISK Blueprint.
David Rosell is president of Rosell Wealth Management in Bend. RosellWealthManagement.com. He is the host of Recession-Proof Your Retirement Podcast and author of Failure is Not an Option — Creating Certainty in the Uncertainty of Retirement and Keep Climbing — A Millennial’s Guide to Financial Planning. Find David’s books at local bookstores, Amazon, Audible as well as the Redmond Airport.
Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.