Planning for Retirement – Your Future is at Stake

When you retire, you will want to make sure that you have everything planned out well in advance. This will need to be a part of your exit strategy, and can ultimately help to improve the worth of your business.

When it comes time for you to retire, you might depend solely on the equity that you have built up in your business. Others may choose to sell their business for a large sum of money, or just keepthe business and have someone else run it for them. Sometimes, people do a combination of these things.

When you focus on your retirement, it is not a good idea to put all of your eggs in one basket. After all, that can be rather risky. This is why some people choose to put some of their profits aside to protect them for the future. You might want to consider options such as the personal income tax deferral. This will help to diversify your investments that will be used during your retirement. It can also help to free up some additional cash flow.

When you save for your business using equity in the business, you will ultimately have a higher return on your investment. The key is to remember that investing in your business is more risky sometimes, and that is something that you will have to weigh out for yourself.

Here are a few of your financial options for retirement:

  • Retirement allowance: At the time of retirement, the SME corporation should pay out a retirement allowance. This is true even if you sell the business. When selling the business, this payment will come through right before the final sale. This can usually be deductible for the corporation.
  • Capital gains exemption: When selling your business, you are entitled to claim a capital gain exemption up to $750,000.
    RRSP contributions: If you are on a salary at the corporation, you will be able to contribute to the RRSP. Usually, contributions can be up to 18% of the earned income minus any adjustments made.
  • Freeze share redemption: When you retire, you can free up some of your frozen shares. An estate freeze can really prove to be valuable when it comes to retirement.

You should definitely make it a point to meet with a professional to discuss your retirement planning. This will ensure that you make the decisions that will be most beneficial to you.