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Retiring Successfully

Kalispel

Aluminum
Joined
Jan 27, 2021
Location
Ohio
“How to startup” posts seem pop up all the time here. The consensus seems to be go slow in the beginning, prepare to struggle mightily, and be careful with debt. The sentiment seems bittersweet or maybe mostly bitter.

How about “How to end”?

How did you successfully transition out of your business when you decided to retire? How do you plan to do it when you decide to stop working? Do you even want to retire or just keep going at your pace? Have you been forced to sell out and how did you get through it?
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
I basically retired more than 10 years ago....everyone said I should keep working .....anyhoo,I kept an industrial block where I had concentrated all the machines I had left ,and many tons of stuff id accumulated over the years ....sold last year ,and included a year to get my stuff out ........what I realise now is I didnt really want the stuff,which is why it sat there for years.....So 12 months of work,sold 50 tons for scrap ,left with enough machines to (hopefully) make a traction engine ,and maybe a largeish loco,and a new shed in my yard to put it all in....But ,did I really want it?.....Im over 70 now,and things are starting to go wrong....arthritis mainly ,but it takes the edge right off what you want to do.
 

McClure Machine

Aluminum
Joined
Mar 22, 2018
You are asking a very difficult question to provide a short answer.
I started after serving my apprenticeship like most people with nothing but a desire to eat and sleep indoors. I had no big business plans, other than find some customers I could get to pay me for my skills.
Over the next couple decades I took some chances, made lots of mistakes but luckily made more good decisions than bad.
Then in 2005 a customer wanted me to do some r and d for them but as I said that is not what we do and you have thousands of engineers, etc. Why don't you just buy me out and then you can merge my technical people with your engineering people.
On December 31st I was sold out and retired with a non compete with a very very diverse multinational company. So I was retired at a young age, we traveled, had multiple homes, antique cars did all the stuff you think you want to do.
10 years later I was so bored I bought some industrial land & building to restore my antique trucks in.
While I was unloading a lathe a guy stopped to ask me if I was opening a machine shop as they were always in need of getting machine work done. I told him not really but I would help them out if they got in a jam. That was 6 years ago and my trucks are sitting outside the shop is full of machine tools and I have more work than I can keep up with.
I found I like doing machine work, like the interaction, like the challenge, like having something to do besides go drink coffee with the guys in the morning. I didn't realize how bored and unhappy I was retired.
I can't advise anyone else, but for me I guess I am just not the type to be retired
 

Scruffy887

Titanium
Joined
Dec 17, 2012
Location
Se Ma USA
Have my own business and it gives me something to do every day. But when we decide to take a 2 week vacation or 2, we do. And now that I am over 70 social security pays for 1 set of track tires per month:D Already have 3 sets on hand for next year.
 

Doug

Diamond
Joined
Dec 16, 2002
Location
Pacific NW
I announced my planned retirement to customers, it took 5 years to break free. Too much long term involvement with customers to just quit with short notice.

My shop building had been rezoned for multi-unit rentals so that created a bidding war which was more incentive to retire. Sold most of the machines to customers and other shops with long term jobs included. Kept a CNC mill and lathe for hobby projects.

Took a few years to get all the delayed remodeling jobs around the house under control. Just as we're ready to hit the road the pandemic put the screws to our travel plans. So we're in a holding pattern right now. I've been helping our son in his construction business, he's swamped and can't find any good workers.
 

Orange Vise

Stainless
Joined
Feb 10, 2012
Location
California
The US government incentivizes business owners to do three things: own property, create jobs, and buy equipment. This is obvious from the tax code.

Not surprisingly, developing an eventual exit strategy involving those three things can put you in a very comfortable position.

1. Own the building you're in. It'll make a huge difference to your asset sheet. If you play your cards right, you might own the entire business park by the time you retire, and all your neighbors will be paying you rent. The US government incentivizes commercial property ownership through low interest rates, SBA-backed lending, tax deductions on interest and building depreciation, and perpetually deferred capital gains taxation through the 1031 like-kind exchange rule (in fact, the tax basis resets at the time of death to FMV, with no capital gains owed by your heirs).

2. Hire and groom great employees, and pay them well. A potential buyer wants a turn-key and won't be interested in shops where the owners are still heavily involved in the day to day. Also there's a high likelihood that your eventual buyers are the employees themselves. Even if they might not have the capital up front, you could seller-finance the business to them over several years. You could even negotiate to retain equity and collect dividends (double dip) even after you've been fully bought out. Don't sell the property though, keep that for yourself.

3. Tax rules favor trading in used equipment for new. Also, customers like working with shops with new equipment, and buyers like buying shops with new equipment. Plan your purchases with resale in mind so that you can keep your core (bread and butter) equipment fresh. This is all in addition to the most obvious benefit, which is that new equipment generally means higher productivity and less down time.
 

sealark37

Stainless
Joined
Mar 24, 2010
Location
Davidson NC USA
Don't buy a motor home or an airplane. Trim you commitments. Do the things that interest you. Save/buy a small drill press and a tablesaw. Hug the old girl.
 

alphonso

Titanium
Joined
Feb 15, 2006
Location
Republic of Texas
After my wife died two years ago, I began to think about what to do with the business, especially how it would affect my guys. And ease the burden on my daughter.

One of my customers came up with a solution: he would form a corporation with the the ones who wanted to take on the risk, buy me out, and let me become an employee for as long as i want or they can stand to have me around.

Transition was effective as of January 1. So far, they haven't run me off.

Like John K., I have a lot more crap accumulated than I thought. Will need to build something at my house by June to have a work place and storage of the "good" stuff.
 

Mark P.

Aluminum
Joined
Sep 1, 2021
The US government incentivizes business owners to do three things: own property, create jobs, and buy equipment. This is obvious from the tax code.

Not surprisingly, developing an eventual exit strategy involving those three things can put you in a very comfortable position.

1. Own the building you're in. It'll make a huge difference to your asset sheet. If you play your cards right, you might own the entire business park by the time you retire, and all your neighbors will be paying you rent. The US government incentivizes commercial property ownership through low interest rates, SBA-backed lending, tax deductions on interest and building depreciation, and perpetually deferred capital gains taxation through the 1031 like-kind exchange rule (in fact, the tax basis resets at the time of death to FMV, with no capital gains owed by your heirs).

2. Hire and groom great employees, and pay them well. A potential buyer wants a turn-key and won't be interested in shops where the owners are still heavily involved in the day to day. Also there's a high likelihood that your eventual buyers are the employees themselves. Even if they might not have the capital up front, you could seller-finance the business to them over several years. You could even negotiate to retain equity and collect dividends (double dip) even after you've been fully bought out. Don't sell the property though, keep that for yourself.

3. Tax rules favor trading in used equipment for new. Also, customers like working with shops with new equipment, and buyers like buying shops with new equipment. Plan your purchases with resale in mind so that you can keep your core (bread and butter) equipment fresh. This is all in addition to the most obvious benefit, which is that new equipment generally means higher productivity and less down time.

All great advice. I've learned so much after our place sold and closed.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
One lesson Im learning is that just because you could do something last year ,you may not be able to do it this year,or next......I went to replace the brake light switch in my pickup.....simple job ,right .....not now.
 

RJT

Titanium
Joined
Aug 24, 2006
Location
greensboro,northcarolina
I don't think I will have a problem retiring. In a few years my son (35 and 12 years in the business) will be ready to take over, buy the business and real estate from me over 10? years. That plus social security, plus IRA should let me play all the golf I want. Probably get involved with some community service work I have dabbed with over the years. 2 year dealing with employees / covid has really soured me. Too much drama between employees about vaccinations, mandates, testing, quarantine. Really sick of it.
 

Doug

Diamond
Joined
Dec 16, 2002
Location
Pacific NW
It's almost tax time again. Here are a couple tables from our accountants annual news letter. Interesting the disconnect between the two.


This first one is the average amount certain age groups currently have put aside for retirement.

• Ages 18-24: $4,745.25
• Ages 25-29: $9,408.51
• Ages 30-34: $21,731.92
• Ages 35-39: $48,710.27
• Ages 40-44: $101,899.22
• Ages 45-49: $148,950.14
• Ages 50-54: $146,068.38
• Ages 55-59: $223,493.56
• Ages 60-64: $221,451.67
• Ages 65-69: $206,819.35


This table shows suggested amounts you "should" put aside for retirement.

By Age... You Should Aim to Save...
30... 1 x your income
40... 3 x your income
50... 5 x your income
60... 7 x your income
70... 9 x your income
80... 11 x your income
Keep in mind the above is more of a guide than a strict plan. The amount you should save for retirement should be based upon factors including:
your income,
your planned retirement age,
the kind of lifestyle you want to have in retirement.
 

Bill D

Diamond
Joined
Apr 1, 2004
Location
Modesto, CA USA
Interesting conversation with the spouse. How long do you and I plan to live? Honestly most will be dead by 80 or less. By 70-75 most will not be physically able to travel and spend lots of money on hobbies.
My opinion of paying extra for a lifetime guarantee product has changed. 20 year guarantee is good enough for me now I guess. The company will be gone before then anyway.
Bill D
 

alphonso

Titanium
Joined
Feb 15, 2006
Location
Republic of Texas
By 70-75 most will not be physically able to travel and spend lots of money on hobbies.
D

I guess I'm beyond your expiration date, but now that I have the money to spend on travel and hobbies, where the hell do I want to go by myself? And the hobbies were to get a break from all the stresses of the business and caring for declining wife.
 

Bill D

Diamond
Joined
Apr 1, 2004
Location
Modesto, CA USA
Of course many will be able to do lots of stuff in their 80's and beyound but should you still be saving for a rainy day like my mom at 97?
When i worked in a hotel in Alaska there were lots of widows. The couple had planned to go see Alaska but never got around to it. The widow made sure to do it before it was two late for both of them.
 

Bill D

Diamond
Joined
Apr 1, 2004
Location
Modesto, CA USA
Interesting to discover that many elder care insurance plans only payout for five years. My Mom bought into one after my dad died. We had to put her into a care home about twenty years latter. AS she declined and needed more care the insurance payout increased by steps. She dies in almost exactly the average three years from entering live in care.
Interesting to see the care homes were about 90% women and very few overweight. Tells me fat men die sooner.
Bill D
 

CITIZEN F16

Titanium
Joined
May 2, 2021
Interesting to see the care homes were about 90% women and very few overweight. Tells me fat men die sooner.
Bill D

Maybe it is genetics but a lot of the women I have know seem to slowly lose their appetite when they get past 80.
I was a good young man that would always visit elderly relatives in rest homes, all women and I was always encouraging them to eat. Not one of them would refuse Mrs. Fields chocolate chip cookies. I felt sorry for the residents that did not get visitors, most all the people I visited shared a room and often the roommate would talk my ear off. You just wonder if that person had crappy relatives or they mistreated people when they were healthy and active. Often the roommate brightened up when I showed up like I was a long lost relative.
 

Doug

Diamond
Joined
Dec 16, 2002
Location
Pacific NW
Interesting to discover that many elder care insurance plans only payout for five years. ..........................
Bill D

Our neighbor who was also our lawyer specialized in estate planning so he had a long term care policy. He had a stroke and went into a care facility. He out lived the 5 year term of his policy and had to be moved to a much lesser quality facility because that's all his wife could afford. He died shortly after being moved.

This was a good example of someone not having enough retirement savings.
 








 
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