1. No Succession Plan

A succession plan will not only give you clarity as to when full retirement is possible, but it will also help ensure you get the retirement you want. With even a basic plan as a foundation, you can begin to build the rest of your retirement strategies on top of it — and with a successful sale, you can also get a head start on the funding you need to lead the lifestyle you want. Be sure to consider the following:

• Hoping your children will come in to run the franchise without discussing the transition in detail, is not a succession plan. Start having these discussions early to ensure they will be up to the task once you’re ready to retire.
• Talk to your business planner or advisor, and make sure your succession plan aligns well with your financial goals and strategies.

2. Underestimated Lifestyle Expenses

While your business is active, it provides many benefits around taxes, income and cash flow that help you to support your lifestyle. A lot of newly-retired business owners find themselves in a sudden cash pinch in retirement because they have not planned their new sources of income to accommodate the new costs of their lifestyle. Be sure to consider:

• Spousal income/pension
• CPP and its tax considerations
• RRSPs and other registered accounts
• Investment income
• Your savings and drawdown strategy

3. Unprepared for Sudden Changes in Health

Your life, goals and needs are constantly changing, whether you’re working or retired. For many retirees, some of the biggest unplanned-for expenses result from health-related events or changes in personal health status that require ongoing attention. So consider how well prepared you may be in the case of:

• Forced retirement due to illness
• Health care costs for a long-term illness
• Nursing home or home care expenses

4. Investment Returns Are Too Low

From now until retirement, one of your most immediate priorities should be growing your net worth. The exact risk/reward balance you need to reach depends wholly on the details of your personal situation, but many business owners are stuck with a portfolio that either generates very little, or risks too much. Your growth plan should address:

• Your capacity for risk
• All financial structures, including holding companies, trusts, registered accounts and brokerage accounts
• Your income needs in retirement

5. Not Enough to Do

This is an obvious one, but nonetheless many people do not sufficiently clarify what sorts of things will fill their days in retirement. Without a clear picture of your lifestyle, it’s difficult to set appropriate income and savings goals, but it’s also a precursor to overspending. Dig deeper and ask yourself:

• What is most important to me in life, and how can I use my time in retirement to pursue or develop this?
• What kind of hobbies or interests will I have the freedom to engage in once I retire?
• Will I want to change my living situation by selling my home, purchasing secondary properties or travelling more?
• Will I want to work part-time in retirement?