Retirement Planning for Business Owners & Their Families

Retirement planning for business owners can be more complex than retirement planning for employed individuals.

There’s an added layer of business succession planning and other business issues to consider.

Do you want to sell your business or pass it to your children? If you’re not planning to do either, can your business provide you with the annual after-tax income you’ll need to retire?

We work with you to identify all the issues in your particular situation and design a retirement plan that will meet your objectives and is financially achievable. Our team includes tax experts who also have the Trust and Estate Practitioners (TEP) designation from the Society of Trust and Estate Practitioners (STEP).

Recognizing that our clients may have other advisors who help them with estate planning, we do not include it in our service packages. Retirement planning is available to our clients for an additional fee.


Our Retirement Planning Process

It’s crucial to take a holistic approach to planning your retirement to ensure all areas and all your objectives have been thoroughly considered. Our planning process involves these steps:

  1. Determining how much money you’ll need to support your desired retirement lifestyle. Many people don’t do a proper analysis of their financial requirements and end up in a less than ideal situation.
  2. Taking stock of all your assets and potential sources of retirement income, including your business, investments, and pension plans.
  3. Determining your life insurance, medical, and long-term disability needs.
  4. Advising you on the various options available to you, the costs of implementing those alternatives, and the potential tax savings available to you.
  5. Implementing the options you have chosen.

Some Retirement Planning Considerations

Although there are many options to consider in planning your retirement, these are some of the issues we frequently discuss:

Passive Assets

You can choose to accumulate passive (non-operating) assets / investments in your business to provide you with a steady retirement income. This defers the income you receive from the business—you’re only receiving income and paying tax as you receive the money generated by the passive assets. While this a common strategy for business owners, it may not be as favourable as RSPs.

Lifetime Capital Gains Exemption

If you’re planning to sell your business to help fund your retirement, careful consideration and planning needs to be undertaken for any investments in passive assets in order to avoid jeopardizing your access to the lifetime capital gains exemption. In order for the capital gain to qualify for your exemption, your company must have held at least 50 per cent of its fair market value in active business assets for two years prior to the sale, and at least 90 per cent of its fair market value in active business assets on the date of the sale. If your company doesn’t meet these criteria, you’ll need to take steps to reach the required levels—“purify” the company—well in advance of a sale.

Savings and Pension Plans

Saving plans and pension plans can be used alone or in combination with other strategies in retirement planning. Some savings plans are:

  • Retirement Savings Plans (RSPs) or Registered Retirement Savings Plans (RRSPs). Although both provide for retirement income, an RRSP has tax-deferral benefits along with the ability to include your life insurance in the plan.
  • Tax-Free Savings Accounts (TFSAs). Contributions to the account are made with ‘after-tax income’ then income earned in the account is tax-free, even when withdrawn.
  • Individual Pension Plans (IPPs). While it requires an initial investment, you can set up an Individual Pension Plan in your business. You and your business contribute to the plan and the business contribution is a deductible payment. You can withdraw the contributions later in life. We have access to some of the best providers of IPPs in the country.
  • Long-term disability planning. Based on the needs of your business, other shareholders or partners in your business, and your family, you can set up insurance to make sure there is no interruption to your business in the event of a critical illness.
  • Life insurance planning. You want to ensure that your family is well taken care of in the event of your death. You may have business partners who would not want to end up in business with your spouse if you died. A life insurance plan can be a fantastic investment vehicle. There are many reasons that life insurance is a critical component of a well-thought-out estate plan.

Changes in Legislation

Changes to legislation could impact a retirement plan you made in the past. Talk to your accountant about how these changes might affect you.

Our estate and trust planning and tax services are available to our Unburdened and Unleashed clients for additional fees.

Book a No-Obligation Chat Now.

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