- Figure out the approximate annual cost of the desired lifestyle in retirement.
- Multiply that by 20 and that is approximately the size of the total retirement portfolio required.
Those numbers are good enough for general planning purposes. A combination of a good financial planner, CPA, and attorney can very likely improve upon these metrics but start here. This is no different than starting the architectural programming and schematic phases with some basic square-foot estimates.
For construction business owners, there are a few dynamics in play that make these calculations more difficult than a simple 401(k) retirement calculator:
- Many owners and executives have personal expenses co-mingled with the business to some degree, including vehicles, meals, entertainment, phones, technology, etc. Understanding what those will truly look like in retirement is often challenging.
- Many owners are continuously reinvesting their retained earnings into the business for working capital, which means that while their net worth is steadily increasing, their liquid cash for investment in a traditional retirement planning arrangement is weighted toward later in life.
This is Part 8 of a 15-Part Series
Topics Covered in the Series Include:
- When is it Too Late to Start My Retirement Planning?
- Future Vision for Your Company
- Post-Retirement Business Involvement
- Where to Turn for a Helping Hand
- The Ideal Lifestyle for the Retiring Contractor
Interested in learning more? Contact us.