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How do I plan for retirement?

  • Blog
  • 15 December 2016

Deciding when to step away from the world of work and enjoy your retirement should require a great degree of thought and forward planning. This shouldn’t just be about deciding when to retire, but about ensuring that you’re financially secure, while taking into account what happens to your business.

How do I plan for retirement?

When should I retire?

Planning for retirement often starts with deciding what age you will step away from your work. You’re now able to work past ‘retirement age’ if you want to. However, you can retire early too. If you decide early retirement is for you it’s important to ensure you have the financial means to support yourself, either through savings, or a private or workplace pension.

It’s possible to claim your private or workplace pension at the age of 55. This means you have access to the support of one pension earlier than you might expect. Men can then access their state pension from 65 and women from 60, although these ages will both change to 66 from 2020.

What happens to my business?

When you do decide it’s time to retire, you should also decide what happens to your business. This process can differ depending on how your business operates. It’s also worth bearing in mind that the average total time to sell a company is between six months and a year.

  • Sole trader – If you work alone, as a tradesman for example, and you decide to retire, you can either sell your company, or begin the process of winding up your business. This includes selling your assets, such as vehicles, equipment and premises, and preparing your capital gains tax return – a tax on the profit from selling something (an asset), which has increased in value.

    As a sole trader, it’s imperative you seek out the appropriate financial guidance when retiring. This ensures the sale of your company and its assets are carried out correctly, that you pay the right tax, and close your business down successfully.

  • Family business – Owning and operating a family business can mean that when you retire there is an element of succession in place. For instance, you might have already decided that the business will be passed on to a member of your family, such as your son or daughter.

    Alternatively, if you’re the last in line with the family name, you may decide to sell your company on to someone else, like a close friend, or business associate. Whatever you decide, you should feel confident you’re leaving your company in safe hands.  

  • Company director – Retiring as a company director or shareholder can entail going through the process of your business being bought out by other shareholders. This can be a lengthy legal process, involving your solicitor, as negotiations are made.

When taking this route, you should consider making plans to retire as soon as possible. This will allow time for the process to run its course, while helping to reduce any unnecessary worry and stress.

Planning your exit strategy

When considering the options of how you will retire from your business, it’s important to have an exit strategy in place. This is a plan that explains the process of how you will leave your business, helping to ensure that each stage runs as smoothly and quickly as possible.

An exit strategy highlights how the transition from your working life into retired life will be made. It also takes into account factors like the impact leaving your business will have on your staff, such as redundancy payments or helping employees to relocate.

Helping you with your financial planning

Regardless of when you decide to retire, it’s a good idea to first seek out financial advice.

This not only helps you have a smooth transition into retirement, but ensures your finances are in order to help keep retired life is as straightforward and comfortable as possible.

There are many options available to help you manage your money in retirement, from organising your savings to making effective investments that can mature over time.

To help our members prepare for retirement, FSB gives access to a series of independent financial and business services. This includes:

  • Free initial consultations
  • Financial health checks
  • Investment advice
  • Retirement planning

Our team can also put together a personalised solution for you and your business, as your transition into retirement begins.

To find out more about preparing for retirement from your business, or to learn more about our independent financial services, please contact our dedicated team or visit our FSB Independent Financial Services page.

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