Why You Should Not Rely On Your Business As Your Retirement Income?

Why You Should Not Rely On Your Business As Your Retirement Income?

Investing in your own business makes sense. Some businesses achieve significant growth each year. However, when you consider that
many small businesses collapse every year, it becomes clear that banking your retirement solely on the success of your business might
not be a good idea. There is no guarantee that your business will continue to grow or even maintain its current value.

When your business is worth less than you were counting on at the time you plan to retire, you may be forced to continue working or sell
it for less than what you were expecting. It is generally not wise to put all your eggs in one basket.

Broadly spreading around your assets may help protect against risk. Putting all your money into a single investment is risky because you
could lose everything if the investment performs poorly — even if that investment is your own business. Of course, expanding your funds
is a method used to help manage investment risk; it does not guarantee against the risk of investment loss.

Consider what would happen if you were planning to rely solely on the sale of your business to fund your retirement, only to have the U.S.
economy fall into a recession about the time you planned to retire. If one occurred when you planned to retire, it could affect the sale of
your business or the income it generates for you.

Likewise, there is no assurance that a larger competitor will not overtake your market, or that demand for your business’s goods and
services will not weaken because of new technology, rising energy prices, consumer trends, or other variables over which you have no
control.

Your business is almost certain to provide some of the money you need to retire. By building a portfolio outside your business, you are
helping to insulate your retirement from the risks and market conditions that can affect your business.

Note: The information provided here is to assist you in financial planning. The information in this article is not
intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax
penalties. You are encouraged to seek tax or legal advice from a professional and licensed tax or legal advisor.

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