Cornerstone Wealth Management November 2017

YOUR LEGACY BEGINS WITH A SUCCESSION PLAN

accounts, who are not well-diversified or don’t have the time to wait out a market recovery. Market volatility can be especially damaging in the early stages of retirement, due to the long-range impact it can have on your income-producing assets. 2. Spending Behavior. The spending strategy that is right for you depends on your personal expenses, anticipated lifespan, and income sources. Understanding how to modify your spending when faced with unforeseen expenses or a prolonged downturn in the financial markets — especially in the early stages of your retirement — is essential to preserving your income stream. 3. Taxes and Inflation. The longer your time spent in retirement, the The normal evolution of a business begins when you’ve started or bought your company. You build and design it, you work to create something special and successful, and then you begin planning an exit strategy or succession plan. Whether that plan means selling your business and transitioning to a new CEO or handing your business to one of your children, there comes a time when a business owner asks themselves what kind of legacy they wish to leave behind — and what kind of retirement they want for themselves. Succession plans must be treated like business plans, which means you must have a clear vision of what you want for yourself and the company in the next five years. Where do you want to be? How do you want to be involved? What do you want out of the company you created? What is your exit strategy? If you decide you want to sell your business in the next five years, start the process by identifying potential buyers and determining how they make purchases. Find out how these organizations valued other companies

and how they’ve integrated or purchased those companies. If you’ve done your job well and made many personal connections, there is a chance that buyers will have already approached you. If you want to give control of the business to a family member, you need to look at the procedures and steps that will ensure a secured transfer. This means training, education, and practice — grooming, if you will — for the person who will ultimately lead your business. Succession planning is just as important as company growth. Without careful preparation, your business could falter under the weight of an inexperienced leader or a company with opposing values. Carefully plan your exit strategy, so you can enjoy your retirement and your company’s success from the sidelines.

A s an entrepreneur, your main goal throughout your career is likely to grow your business to be as successful as possible. However, you may not think about what happens to your business after you retire. While growth is certainly important in business, careful succession planning can ensure your company’s success after it leaves your hands.

The Top 4 Challenges to Your Income in Retirement

No matter how prepared you may feel for life in retirement, no one is immune to the challenges presented by market volatility, rising taxes and inflation, and longevity. If you’re not generating enough income to outpace rising taxes, inflation, and health care costs, it’s only a matter of time before your expenses may begin to exceed your income, creating a shortfall. The good news is that, with proper planning, you can develop strategies to minimize the following risk factors that threaten to erode your income in retirement. 1. Market Volatility. A sudden market downturn can have a significant impact on investors receiving regular distributions from retirement plans or investment

greater the potential that taxes and

inflation may erode the purchasing power of your savings and impact your lifestyle. Protecting your assets from inflation, as you move forward in retirement, is critical to ensuring that the income you rely on will be available for as long as you need it. 4. Longevity. Modern advances in medicine and health care mean that Americans are not only living longer, but enjoying more active and productive lives. However, coupled with rising health care costs, longevity represents the single greatest threat to retirement security: outliving one’s income in retirement.

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