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Facing Retirement
by   Mark Wade  

Retiring from your own practice requires some crucial decision-making.
Retirement for most people is a rather simple affair: You decide it’s time to stop going in to your job, so you notify your employer of that decision and you stay home. But what happens when that employer is yourself? That complicates matters rather severely. Now you can’t just tell the boss that it’s time to start playing golf on weekdays. It’s up to you to compensate for your own absence.

This is the first in a series of newsletters from Echelon Wealth Strategies that will deal with the specific financial problems of professionals. We are fortunate to work with many professionals who have the unique challenges of running a business as well as being the primary focus of that business, such as doctors or CPAs.

It may seem odd to look to a wealth manager for help in making your business accomplish the transition from you being there full-time and in charge to you retiring, but it’s really all in keeping with the way we look at the big picture for our clients. We see the role of a wealth manager as making sure all the pieces of your financial life fit together. And retirement is one of the most critical times in your life.

THE OPTIONS

Timing your retirement is more a quality-of-life decision than a financial one, but the financial aspects are important as well. Here are some of the ways for professionals to make the transition to retirement:

Ease into it: Take on a partner, or increase the load taken by your current partners as you switch to a part-time status.

Benefits You make a gradual transition, and the switchover is made easier for your clientele.

Drawbacks Reducing your salary now could affect your retirement benefits, depending on your retirement plan.

Sell out: Get someone to take over your practice wholesale.

Benefits You reap the profits from selling the practice, in addition to your retirement benefits.

Drawbacks The abrupt changeover could be difficult for your clientele, although you can plan to be around for the transition.

Shut it down: Pull down your shingle, and simply take your retirement.

Benefits This is clearly the easiest option, with very little mess to clean up.

Drawbacks You don’t get to take advantage of the equity you’ve built up in your practice over the years.

Get a job: No matter what you do about your practice, you can make the transition into retirement by working a more regular job, such as a doctor with an HMO or an attorney with a legal-affairs group.

Benefits You can focus on plying your trade without having to run a business as well, and usually work hours of your choosing.

Drawbacks After a lifetime of working for yourself, it can be hard to start working for someone else. And the money would almost certainly be less than it would be in your own practice.

PLANS FOR THE FUTURE

Of course, these are oversimplified to a great extent, but it’s a way of beginning the discussion if you’re starting to think about retirement. And no matter where you are in your career, it’s never too soon to start considering various ways of retiring. Careful planning on the front end can eliminate an awful lot of problems on the back end.

 

 



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