For many blue-collar business owners, the idea of retirement is a distant thought. After all, you might end up having to work until you're dead and that's a terrible idea. But as the years go by, it can become harder for aging blue-collar business owners to keep up with their businesses' demands.

As you age out of your industry and retire from your company, you might find yourself left without any income or means of support. The good news is that there are ways for blue-collar owners to balance both personal and professional needs so you don't have to choose between staying in the workforce or retiring on time. Stick around because we'll show you how!

 

 

Transcript

For many blue-collar business owners, the idea of retirement is a distant thought. After all, you might not be having to work until you're dead. And you know, that's just a terrible, terrible idea. As the years go by, it can become harder for aging blue-collar business owners to keep up with the business demands.

You know, as you age out of your industry and you retire from your company, you might find yourself left without enough income to have a great lifestyle. The good news is that there are ways for blue collar owners to balance both personal and professional needs so you don't have to choose between staying in the workforce or retiring on time. I wonder if this might sound like you: I don't have to really worry about retirement. My business is going to get me there. After all, I'm always told my business is my biggest asset.

The problem is your business shouldn't be your biggest asset, at least from a cashflow point of view. If it is, there's a really good chance you're going to always be thinking about being able to afford to retire is always five years away. Now I call this always five years away something called perma-five.

So in this video, we're going to tackle the secret behind a fully funded retirement. And the answer just might surprise you.

So here's the thing. If you want to retire, having enough cashflow to afford to live your life is crucial. I know that sounds obvious. The problem is you've been led to believe that your business is your biggest asset. This makes you feel a little queasy. You might not even really think about it, but you know there's something wrong here. We believe the advisors in the world are doing you a big disservice. Let's take a quick look at a relatively typical blue-collar business. Let's say after your business and after your expenses and a reasonable salary, you show a profit of $250,000 per year. Let's also say that your business will sell for four times free cash, which means you would receive a million dollars for your business. That is, if your business would even sell. The problem with this is you really don't get a million dollars. Now you're going to lose at least 40% to taxes and fees when you sell. This leaves you with $600,000. And if we follow best planning practices, you could spend about 4% per year. You know, that would only give you $24,000 per year. Are you starting to see the problem?

There are three other areas you need to focus on if you ever want to be able to afford to retire and leave your business on your terms. For blue-collar owners is a very good chance you could buy the building you operate your business in. If you do that, I bet the value of the real estate will give you more cash than you'll get from the sale of your business. Often this amount could be two or three times as much. So let's talk about this for a second. Let's say I buy a building that's worth a million dollars. And I get an 8% cap. And I buy it 15 years before I retire. That means I'm going to have about $80,000 a year in free cash flow. Well, 80,000 sounds a lot better than 24,000. But those two together only come up to $104,000. That's probably a lot less than what you were living on before you sold the business.

So let's finally talk about your 401k plan. You know, for a lot of business owners your 401k plan is a great place to pre-fund your buyout. You know the truth is, a lot of business owners, and you may be one of them, do have excess cash while they're running their business. And they could afford to put more money into the retirement plan.

The problem is too many business owners don't realize how much they can put into their retirement plan. You might think the most you can put away is $25,000 per year. You know, that's just not true. The older you are, and if you have less than 25 employees, there's a good chance you'll be able to save as much as you can imagine, up to $300,000 per year if you have the cash flow to support it.

So if you use that plan, there's a good chance you could have two or three million dollars in your retirement account when it's time to leave your business. Again, an asset that'll be a worth far more than the after tax and fee value of your business. When you take your business and you take your real estate and you take your retirement plan, we add those three things together, that would likely give you enough to leave your business on your terms.

You know, we've been coaching people for years on what we call the four boxes of financial independence. It's the first step in helping you gain financial freedom from your business. Once you know the facts, it's easy to design a plan.

It's so easy that in three steps, you'll find out what you need to do to know what's needed for you to become financially free from your business.

The first thing you need is you need to have an analysis done in a down and dirty way to found out if you're on the right track to be financially free from your business. That's where the four boxes of financial independence come in. Number two is you want to give us a call and have a short conversation to see where you stand. We'll take out our four boxes tool. We'll walk you through it, and we'll see how much cashflow it looks like you're to have at retirement today. And three, you need to start taking actions that will give you a level of confidence that you'll be able to leave your business when you want and the way you want.

So I would love to have a conversation with you about your financial freedom. So feel free contact me at jpatrick@stage2planning.com to set up a time for us to talk. In the meantime, if you're not ready to talk, Download our FREE eBook on the Financial Freedom Project. You'll learn what it takes to become financially free from your business. I even explain how you can figure out if you're on the right track. And you can figure it out all by yourself.

So while you're at it, scroll down and let me know what you think about reaching financial freedom from your business. I want you to stop worrying about whether you'll reach financial freedom. Instead have real knowledge that will help you make wise decisions about your business.

Hey, this is Josh Patrick. You're at The Sustainable Business. Thanks a lot for stopping by. I hope to see you back here really soon.

 

Topics: affording retirement, selling your company, retirement planning, strategic business, right way to retire

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