As a business owner, your focus is often on the financial health of your company. However, it is equally important to prioritise your personal financial wellbeing.

We had the pleasure of presenting at a recent Giftware Association (GA) Working Lunch, which focused on just that, personal financial wellbeing for business owners.

The session was designed to guide attendees in identifying their core values, setting clear goals, assessing their current financial standing, and provide a foundation from which to improve their financial situation.

Key findings from the session included:

• Early retirement goals: Many of the attendees aspired to retire earlier than the State Pension age, making it essential to plan accordingly.
• [NB: For people reaching State Pension age now, it will be age 66 for women and men. For those born after 5 April 1960, there will be a phased increase in State Pension age to 67, and eventually 68.]
• Absence of financial plans: Many of the attendees did not have a personal financial plan; it is difficult to achieve your long-term goals and manage risks effectively without a financial plan.
• Pension assets: Not all attendees knew the value of their pensions. For those that did, their pension represented a significant asset (second only to their home). Pensions can be strategically leveraged to support your retirement plans. Pensions are an efficient way to fund your retirement, which can also reduce your personal and business tax liability (depending on your circumstances).
• Lack of income protection: 90% of attendees did not have income protection - protecting your income is crucial, especially if you are the primary breadwinner in your business or home. Using your business to fund an income protection policy is an efficient way to address this need.
• Retirement Income: Many of the attendees were not clear on the level of income they needed in retirement, to support their desired lifestyle. Understanding the cost of your lifestyle will help you evaluate how much you need to save, how much risk you should take and when retirement will be possible.
• Estate Planning: 50% of attendees did not have a Will or Powers of Attorney. These are important legal documents that ensure your wishes are carried out and your affairs are managed properly, in the event of your incapacity or death.

These are not unique findings. In fact, they are closer to the norm than you might think. But in summary they paint what might seem a rather gloomy picture:

“We own a business with expectations of success and early retirement.

But:

1. Have not really planned how to achieve this.
2. Have pension provisions but may not be using the assets to best effect.
3. And, despite being the primary ‘breadwinner,’ have nothing to protect our income should something go wrong.”

HOW MUCH IS ENOUGH – to maintain the standard of living you deserve in retirement, even in the years before your State Pension begins?

Let’s begin with that State Pension.

One of the UK’s major insurance companies (Scottish Widows) runs an annual National Retirement Forecast (NRF) survey designed to capture a snapshot of the UK’s future retirement landscape.

It estimates the lifestyle that people might expect to achieve when they stop working.

The main conclusion of the survey is:

• that over a third of the population are NOT on target to achieve even the minimum lifestyle standard when they reach retirement.
• An almost identical proportion are currently set for a ‘comfortable retirement.’ One family’s comfortable,
• however, is too often another’s despair.

Early Retirement

Of course, the State Pension (SP) will not be available to you for a number of years after you lock that office door for the last time. Your plans must include:

1. Calculating how much you need on top of the SP to deliver the lifestyle you aspire to and deserve.
2. How to provide that total retirement income in the gap between selling your business and the SP topping it up (currently age 66).
3. What plans you should put in place to create and maintain this income.
4. And the big question – HOW MUCH IS ENOUGH?

 HOW MUCH IS ENOUGH to balance your health, wealth, and wellbeing when your income in retirement depends upon the provisions you have made whilst working?

Read more HERE.

Contact Andrew Snowball HERE.