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As baby boomer business owners near retirement, they should be devising an exit strategy - the plan to exit your business gracefully, to preserve maximum value.  If you haven’t done this, you’re not alone.  One recent study by White Horse Advisors LLC found that 87% of baby boomer business owners didn’t have a written exit plan.

The usual “strategy,” states Bankrate.com, is “manage til you drop” which indicates the lack of any sort of clear plan.  The problem with neglecting a plan is that you’ll not be able to maintain the value of your business if you drop dead or become disabled.   In fact, I have the ability to think of lots of things that might happen.  It’s not pleasant to think about.  Brent Dees (About.com guide for Small Business Information) calls them the “Four D’s: Death, Disability, Divorce, Departure.”

My suggestion:  Begin thinking about this, think about the Four D’s, and begin putting together a written plan.  Matter of fact, I should be doing the same thing myself.

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Rico at ContractWorker had an interesting post about some research on work-at-home types that got me to thinking about how our work habits differ and how different our lives can be when we get to work/rest/play according to our own body clocks, and not according to a restrictive job.

My husband just retired a couple of weeks ago, and I can see that already he has created a more pleasing schedule for his body clock. He had to be at his previous job by 7:30 a.m., and he’s not a morning person at all. Now he sleeps until about 8 a.m., exercises, and we speak a tiny over breakfast, before he heads to his part-time job or works at home (his choice - he gets paid either way!). He often comes home for lunch, and then stays at work until 6 or 7 p.m. This seems to suit him much better.

What about you? If you were retired or working at home, what schedule would you select? I can’t wait to retire and figure out my schedule!

Tags: baby boomers, Contract Worker, retirement, work-at-home jobs

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To continue my interview with Bill Losey, about National Retirement Planning Month:

Q: Bill, you mentioned in our last discussion about emotion in making retirement decisions. I’ve a financial background and I always thought I was making un-emotional decisions, but after reading Retire in a Weekend I realized I was letting emotion rule me. What are your thoughts on that?

A: We humans are emotional beings. Most of our decisions are based on emotion, even when we think we’re being rational. (We kind of think we’re Mr. Spock, but we’re not? Exactly.) That’s the true value of hiring a third party objective observer. This person can help you develop a plan and strategy, ask questions like, “Why do you want to do this?” and help you consider goals and priorities. And we make you write it all down, so when you want to do something later, we can state, “Well, you said your goal was X; how does this new idea fit with that?”

Decisions we make about money come from our upbringing and family. Here is a swift example: Many women I talk to who are in their 50’s and are widowed or divorced have “bag lady” syndrome. They have nice portfolios but they are afraid to take out any money and they deprive themselves, because they are afraid of being “bag ladies.” (I know exactly what you mean, Bill! I have a good friend with whom I have a standing joke about ending up as a “bag lady!) As an advisor, I remove the emotion from the equation and give my clients the approval to do what they want to do or keep them from doing something they really don’t want to do, based on their original plan.

Q: So can baby boomers do their own retirement planning? Does everyone need to pay a financial planner?
A: Sure you can do it yourself.
Here are some tips if you want to do your own retirement planning:
1.Create that written strategy, with goals and specific objectives.
2.Remember the emotional factor, and stick to your plan.
3.Recognize that “I can’t guarantee squat.” Plan for things to change.
4.Recognize that a “set it and forget it” strategy doesn’t work. You’ll need to revisit your portfolio periodically.
5.Read financial magazines and newspapers, but take their suggestions with a grain of salt. The funds they recommend as “best” are often advertisers. And by the time the magazine goes to print, the fund may not be doing as well as it was months and months ago.

When the World wide web started booming, people thought it would be the end of the financial planning business. On the contrary, what’s happened is that people are bombarded with so much financial advice that they don’t know what to do or who to believe. This day, financial planners are more in demand than ever. It all comes down to your comfort level with doing it yourself.

If you go to the National Retirement Planning Month website, you can get a free copy of Bill’s book, Retire In a Weekend, and have an chance to win a daily drawing for a lottery ticket…and more!

pic courtesy Bill Losey

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Hurricane season is upon us. Storms have ravaged the Midwest. Do you know how to prepare for disaster?The SBA is hosting a disaster preparedness discussion online tomorrow (Thursday, July 10) at 1 p.m. EDT. The web chat on “Preparing for Disaster - What Every Homeowner, Renter and Business Should Know.” For example:Do you know where your business records are? Are they backed up somewhere safe?Do you have computer files backed up somewhere off premises? How often do you back them up?Would you and your employees know what to do if a weather emergency happened during business hours? What would you do with customers/patients?What will you do to protect your building from a storm?I’m going to be traveling on Thursday, so I won’t be able to participate. Let me know what you think.

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Last week, I posted some questions and answers from my interview with Bill Losey about National Retirement Planning Month.  This week, a couple more questions: 

Q:  You mentioned that the #1 biggest concern baby boomers have is that they’ll outlive their incomes.  I can certainly relate to that one!  What’s the ideal strategy to alleviate this concern?

A:  It used to be that people who retired had pensions; now I’m seeing that 70% or more don’t have pensions.  They have Social Security, and some 401k/IRA money, and they have a lot of misinformation.  People are overwhelmed; they don’t know who to have faith in.  So they look for guarantees, and some certainty that if they do “X” they’ll be guaranteed never to outlive their money.  

My retirement success principle is this:  I can’t guarantee squat!  And neither can anyone else. A while back, a bunch of financial advisors, and finance professors came together in New York City and based on research and past data to come up with a projection what it would take to not outlive your money. These financial gurus came up with a figure of 4% as a nice starting point to use for withdrawals from your portfolio.  Let’s say you retire at 60 and want your money to last 30 years (assuming you might live to 90).  You can take out $4,000 each year for each $100,000 in your portfolio.  With inflation, this puts you in a position of being able to have the possibility (notice I didn’t say “guarantee”) that you might not outlive your money.  This projection still makes assumptions about inflation, returns, the U.S. and world economy, and taxes.

 If you want guarantees, I would suggest you read the book 101 Stock Market Guarantees by Ivana Retyre and her husband, Dr. Ken I. Retyre.  (Say their names slowly.)  The book contains nothing but blank pages!  If you want to get it for a  friend as a joke, go to 101guarantees.com    It makes a great gag gift, and you get the point swiftly.

Next, can you/should you do your own retirement planning?

Tags: , Bill Losey, national retirement planning month

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If you are looking for an uncommon vacation, to a different place this summer, you might want to consider.  The Home Exchange, for example,  allows you to list your home and exchange for another home.  The cost is $99.95 a year.  They say most exchanges are direct (one-to-one), and you should clean at the end of your visit.  (I would clean before I left my home, and again when I left the exchange home - yuck!  Too much cleaning for me!)

With Vacation Exchange, you pay only when you arrange a home exchange ($500), and the exchanges don’t have to be one-to-one. This one might work superior for me — I’m not sure how many people would want to come to Cedar Rapids, Iowa!  If someone uses your home, you get a $250 credit.

 ExchangeHomes.com says they’ve been around since 1986, and they’ve a nice “how it works” page.   You pay $39.95 for a one-year listing.  I couldn’t figure out how much you pay to rent a home.

 I’m not recommending any of these services,  just giving you a little information so you can check them out yourself.  I’m ready to go to Ireland!  Where would you like to go?   

Tags: baby boomers, home exchange, Ireland, vacation homes

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I guess I think it’s pretty cool that someone can retire and have a little “fun” business, like the ones described in a current NYTimes article. One guy took some photos of birds and got paid a tiny money. Another makes and sells mobiles, and third is a freelance writer.

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Maybe I’m a little jealous, but these guys are obviously not worried about money. Must be nice. I’m also wondering if they file income taxes as sole proprietors and claim their losses. The “hobby loss” rules of the IRS require a small business to follow certain guidelines to avoid having the tax loss be denied.

Some of the factors the IRS considers:

• Is there an intent to make a profit?
• Does the owner depend on the business income?
• Are the losses beyond the control of the owner, during startup, for example?
• Is the owner taking steps to improve profitability?
• Does the activity make a profit in some years? (The IRS guideline is that the business should make a profit in 3 of the last 5 years).
• Is there an expectation of making a profit in the future?

The IRS also looks at the type of activity of the business. The freelance writer in the example has a better chance of getting his business accepted than does the guy who is taking pics of birds (writing and selling that writing is easier to justify as a real business than birdwatching and photography).

If you’re considering starting a new business when you retire, check with your tax adviser to make sure your business losses will be able to be used to offset other income.

Tags: baby boomers, hobby loss, IRS, retirement, small business

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Baby Boomers are good volunteers. Some have already retired, while others have no kids at home and a tiny free time.

We boomers know how good it feels to do things for others. We remember Girl Scouts and Boy Scouts, and school volunteer projects. Many of us have lived in our communities for a long time and we feel connected to them. When something like the recent flooding and storms in Iowa happens, we immediately jump in to help.

My husband just retired, and even though he’s taking a part-time job, he wants to go back to volunteering at the local hospital (I have difficulty picturing him in a Candy Striper outfit!). I used to volunteer at a library, and that’s on the top of my list when I “retire.”

If you have considered volunteering, you might want to take a look at this website: VolunteerMatch and particularly the Boomer Volunteer Engagement section. Simply, VolunteerMatch connects volunteers with non-profit organizations in need of help. The Boomer Volunteer Engagement section showcases a new book and includes 14 pages of worksheets that you can download or use interactively to determine what volunteer opportunities might be a good match for you and your organization.

As an example of how their matching program can work, I searched my town and “education.”  One of the alternatives was Junior Achievement.  Of course!  I could go into schools and teach kids about economics (one of my favorite subjects - don’t laugh).  Now it’s on my list.  (My list of activities for “retirement,” by the way, far exceeds the number of hours in the day, but what the heck.)

They also have “virtual” opportunities, whatever that means.

One of the organization’s strategic initiatives is Disaster Preparation and Relief: Using technology to help the American Red Cross and other
disaster relief organizations more effectively respond to and prepare for natural disasters.

The site spotlights volunteers:  This week the spotlight is on Kate So, who is a retired attorney who is now an advocate for children in the legal system.

What volunteer work would you like to do?

Logo courtesy VolunteerMatch.com

Tags: baby boomers, volunteering, volunteermatch

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Under Barak Obama’s self-described tax plan, the “rich” would pay more taxes. And he says that $250,000 a year in income is rich.

Let’s state you are a baby boomer with a small business - not a C-corp. If your business is an S-Corp, an LLC, or a sole proprietorship, your business income is included in your personal 1040 and taxed right along with other income (like a pension or spouse’s salary).

If your business profit is, state, $150,000 for the year, and you and your spouse also make $100,000 from other sources, you’re considered “rich” and you’ll pay more tax.

Back to my question: Is $250,000 a year RICH?

Tags: baby boomers, barak obama, income tax, small business

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Filed under: Estates, Celebrity Shopping

The rumors involving Russian billionaire Roman Abramovich come and go so fast, sometimes it’s hard to keep up. The large one this week was that Abramovich, one of the world’s biggest spenders, had picked up a home in France for $500 million. The home in question La Leopolda, is an elaborate villa on 10 acres located on the French Riviera.

Various sources said that Abramovich and his girlfriend Daria Zhukova had a private viewing of the estate and fell in love with it and decided to buy it, although he already owns a chateau nearby. The story quickly made the rounds of major websites and newspapers and yesterday and then, just as swiftly, disappeared. The Independent reported that Abramovich’s spokesperson shot down the claims saying that Abramovich doesn’t need another home in France. Still, with Abarmovich, you just never know, he could still be moving in and just be playing a guessing game with the press.

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