When you work for yourself, your retirement age isn’t necessarily what society mandates it to be. In fact, you have the ultimate flexibility. With that, it is prudent to be able to calculate when you can afford to retire from your professional practice.
From the desk of our Risk Manager in London, read on for a good overview on the factors you need to take into account in your “When can I retire?” calculations!
This article is a 6 min read.
If you are a doctor, dentist, accountant, attorney or other professional who owns their own practice, nothing is more important than planning for the future and planning for retirement. This is equally true whether you are a young professional at the early stage or a seasoned professional considering retirement in your immediate future.
Whatever your age, or stage in your professional life, failing to plan for your retirement amounts to one thing – planning to fail.
None of us can predict with a high degree of certainty what will happen in the future.
If you own your own professional practice your future retirement income will be dependent upon the performance of your practice, whether it can be sold as a going concern and for what value, and how that sale may be structured.
Your retirement income will also depend upon the performance of your other investments and any pension you may have together with any savings that you may have accumulated.
None of these can be predicted with certainty unless you are imminently about to retire.
While there are many methods for calculating the worth of a professional practice, one common method is to look at a multiple of core profits. If you are considering selling your professional practice, it is important that you have your practice valued. Knowing the true worth of your practice is essential.
Many professionals hate the idea of retiring fully. If you are over 50 you need to consider whether you want/can retire in full at your planned retirement date or, in the alternative, whether you wish to continue to work in a more limited role as a consultant or associate (essentially this means working for someone else).
Whatever your decision, a competent wealth manager (like Firstline Securities) can assist a professional with the sale of their practice. Firstline can assist with obtaining a valuation of the practice as well as building a coherent and viable financial plan in advance of any possible sale.
The key question that must be answered is:
Can you afford to retire at the point you plan to sell your professional practice?
Ascertaining the value of the professional practice is the starting point to answering that question.
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The sale of a professional practice can generate a significant chunk of income, but the transition from living on practice income to living on retirement income needs to be managed carefully to ensure financial security.
This is where wealth management becomes key.
To retire from your professional practice, you must have a plan, and to create a plan, you should strongly consider engaging the services of a wealth management specialist.
In creating a retirement plan the first step is to assess what your likely income will be when you plan to retire. The other side of the equation is estimating what your anticipated expenses will be.
In creating your plan for financial retirement from a professional practice you will need to consider the following (this should not be considered a definitive list and is no substitute for visiting a wealth management specialist).
We are Firstline Securities Limited, an independent financial services firm, based in Trinidad and Tobago.
We are experts in creating, growing, and retaining wealth for our clients in T&T, as well as in the French, Dutch, and OECS territories of the Caribbean.
We invite you to look around our website for more information. If you’d like to begin the process of becoming a client, simply click the button below.
