Retirement for Small Business Owners

Business owners retire later in life than people who have been employees.  Some say this is because people who run their own business are more likley to be doing what they love and don't see any reason to retire.  Others say it is because succession planning is complicated.  And some say it is tough to give up the business income, especially if there is going to be a substantial drop in income once the business has been sold/closed.

Depending upon the type of business, some owners have the option of either dropping some of their lines of business to free up more time, or cutting back on the hours during which they offer their services.  My esthetician only works 4 days a week; she is prepared to sacrifice income for free time.  In the summer she only works 3 days a week.  Most importantly, she hasn't lost any of her clients by doing this.  She is fully booked year round.

The best advice I can offer to small business owners is that it is important to invest time in succession planning, to consider who might be intereted in buying your business, and in the end, even be prepared to shut it down if no one wants to buy it from you.  We have friends who were running a thriving and prosperous framing business in a nearby small town.  When they decided they wanted to do something else, the could not find a buyer and in the end decided to simply close it.   This can be tough to do but in some cases it ends up being the only choice. 

Semi-retirement: Is it for you?

So...I haven't posted in awhile.  It isn't that I'm ignoring issues that relate to retirement.  Quite the contrary, I spend a lot of time reading, and thinking and pondering the issues.  What I'm finding is that since I began splitting my time between working and leisure, I seem to have lost some of my "edge".  By this I mean that the more leisure time I have, the harder it is to move back into work mode. 

Don't get me wrong.  Once I'm in work mode, I really get into it.  I think that issues around retirement and aging are fascinating and when I'm working, I quite enjoy myself.  But be forewarned if you are thinking of moving from full time work to semi-retirement, you may enjoy it, but you may find that you lose your "edge" too.

Maybe my next post will be about whether "losing one's edge" is a bad thing or perhaps a good thing.

Accepting Aging Gracefully

We have been leasing a fantastic island cottage for several years now.  It is a wonderful old 1920s cottage, the island is situated on a beautiful lake, and we have spent many peaceful, relaxing and enjoyable weeks during the summer months engaged in island living.  We have friends on the lake and many friends and relatives who spend the summer nearby.  It is a perfect summer lifestyle.

However, one day the owners will decide to sell the island and we agonize over whether we would be able to buy it.  Given that we are in our 60s and are only going to get older, that we invested in a fantastic kitchen extension on our house a few years ago using our Home Owner Line of Credit, and really don't want to tie up our savings (not to mention some of our cash flow) on a second property, it is highly likely that we will decide that it doesn't make sense to buy a cottage property at this point in our lives.

I have to admit that losing access to this cottage will be devastating to me.  I love being on the water, I love the laid back lifestyle, the privacy, and the fact that we connect with so many friends and family in this place.   I'm always trying to concoct schemes that will make buying the island a possibility.   My husband is less disturbed about losing access to the cottage; he takes the more philosophical view that we will find new and interesting things to do during the summer; he has no great interest in ever renting a cottage again.  As a retirement planner, I would probably advise someone else in the same circumstances to do the practical and rational thing, i.e. let it go, but as a person I might say that not all decisions in life should be based solely on rational thinking and that sometimes decisions based on emotional considerations should be pursued.  What do you think?

Will They Remember Me?

Some individuals retire and have high expectation that they will receive all kinds of calls from their colleagues and that the work will just come.  Sadly, many retirees discover that once gone, quickly forgotten.  A close friend recently retired who expected that many former colleagues would be beating down his door.  They aren't.  No one has called asking for this individual to bring their extensive knowledge to bear on the problems of the day. 

If you have a desire to keep one foot in the door and hope to take on some contract, board work, or even work on a volunteer basis, it is important to let the world know BEFORE you retire that part of your retirement plan includes continuing to work.  You cannot expect your colleagues to know that you do not plan to fully retire.  During the last year of work, it would be advisable to set the stage for the next phase of your life by informally conveying what your interest is going to be in continuing to contribute.

Otherwise you may find yourself sitting in a very quiet house, waiting for calls that are not going to come

Volunteering - Not as Easy as You Think

Many retirees want to "give back" and see the volunteer sector as a good place to do that.  For many, the perception may be that if they just show up, the organization of their choice will jump at the chance to have them as a volunteer.  However, the reality of modern day volunteering may present them with quite a shock.  Why so? 

First of all, they may discover that, instead of welcoming them with open arms, there is a selection process in place that involves an application, reference checks, and an interview.  That almost sounds like the workplace they have just left!  In some instances, this process may lead to rejection as a candidate.  I know because that happened to me.  I went through the process for an organization that I thought was a perfect fit for me.  They didn't agree.  I got screened in at the application stage, went to the interview, and then received a rejection letter.  I was devasted because I had never for a moment thought that I wouldn't be given one of the 20 slots (out of 50 people being interviewed).  To make matters worse, I then found myself wondering what it was they didn't like about me. 

Secondly, let's suppose that the person does get through the recruitment process and is assigned a role.  Many organizations do ask for a time commitment, say six months or a year.  I volunteered at our local hospital and, based on a discussion with the Volunteer Coordinator, was given an assignment (one afternoon per week) on the Continuing Care ward.   As a home-based business person, I wanted more social contact and told the Volunteer Coordinator this.  My assignment sounded promising except that the other volunteers that were supposed to work with me, either didn't show up or quit.  I ended up working alone.  Also, for some reason I still don't understand, the hospital staff, including the nurses, were quite unfriendly.  None of them even remembered my name, even though I was on their ward an afternoon a week for a year.  I did enjoy helping patients with lunch and socializing with them but in the end I did my one year stint and then decided that it wasn't for me.  Of course, one of the nice things about being a volunteer is that you can quit if you decide it just isn't working.

So...some advice.  Think carefully about what kind of volunteering you want to do, identify what your expectations are, check out the relevant organizations carefully, and realize, that if they do have a selection process in place, you just might be screened out.  In the end, one of the luxuries retirees have is time and if this time can be dedicated to the volunteer sector, it can be a win win situation so go for it with your eyes wide open.

Researching Family History

My husband's father spent a number of years in retirement researching his family's history.  He left behind when he passed away, a large database of information.  When my husband retired, he picked up the torch and has done more research using several internet-based genealogical sites to assist in the process.  On our recent trip to Ireland, we visited the small town where both his father's parents came from, Lorrah.  It's fine to have a detailed database of dates of birth and death and marriage, but it made this history seem so much more real to walk on the main street, visit the postmistress for a short discussion on whether there were any Conroys left, and to see the four historic religious buildings in town (in varying states of decline), one of which dates to 540 AD!

Through his research, my husband has discovered a number of cousins, one in California, one in Tennessee and one in Northern Scotland, that he now keeps in touch with.  No wonder so many people as they move into later life and retirement, place a priority on doing this kind of research.  It involves challenges, mysteries, great finds, and maybe even new friendships.  Best of all, once documented, the output can be shared with anyone who has an interest in the family and provides the next generation with a sense of where they have come from.

Maintaining Friendships

Further to an earlier post, I wanted to report on our recent trip to Ireland.  We attended the wedding of a good friend's daughter in Clifden, Ireland.  We made the decision to do so based on the long standing friendship between my husband and his friend, Hugh.  They attended the University of BC together and have remained good friends every since.  We had a wonderful time in Ireland, spending most of the week in the Clifden area.  Ballynahinch Castle Hotel was amazing (see photo), and it was wonderful to have a chance to meet so many of the attendees at the wedding over the weekend at the hotel.  We also were able to spend high quality time with our friends.

The night before returning from Ireland, we stayed at an airport hotel.  In the dining room, who did we run into but the newly married couple!  It was a good chance to talk with the newlyweds post the event.  Hugh's daughter made a point of letting us know how happy her father was that we had come and that it meant alot to him that we had attended the wedding.

Research confirms that having strong social networks among family and friends is correlated with being happy in retirement.  This means being prepared to give people a priority.   In attending Hugh's daughter's wedding, we were putting this principle into practice. 

A Max Report

Max, our 14 month old miniature daschund, has now moved into his teenage years.  Despite our many efforts, he still believes that he is in charge.  For an 11 pound pet, he certainly has a very big ego.  Despite this, he has some wonderful traits.   His level of enthusiasm for play and walks (preferably offleash) is contagious.  His several walks a day are keeping us (most particularly me) more fit.  We also enjoy going for a "pack" walk that involves all three of us.  It is one more thing that my husband and I now have in common and we enjoy these walks immensely.  When one of us is out,  he keeps the other company.

  

His ability to simply go to sleep when we both go out, sometimes for 4 or 5 hours at a time, is amazing.  We simply tell him that he has to "stay" and he does just that.  He finds a nice warm confortable spot, usually on the $400 faux fur throw that is draped on the living room couch.  As far as we can tell, he doesn't eat, chew, explore, or have accidents while we are gone.  His happiness when we return is a joy to watch.  He basically wags his whole body. 

During the early months, when he was a tiny, seemingly helpless puppy, I wasn't convinced that getting a dog was a good idea.  Now my husband and I agree that it has been a great success and we look forward to many happy joyful years with Max, Maxi, the Maxer, Maximillion, Macaroni, etc. etc.

The Next Generation Marries

In the past year we have had invitations to a number of weddings.  The children of our boomer friends are now entering the marriage zone.  These invitations are for not just out of town weddings, but out of country weddings.  Last year we reluctantly declined two of these invitations, one to Australia and one to the South of France.  In the case of the latter, our Irish friends' daughter wanted to get married in St. Remy de Provence where our friends have a holiday home.  We had just been to Malawi, a major one month trip, and just couldn't contemplate a trip to Australia or even to the the wedding in France. 

Well, the second daughter of our Irish friends is getting married shortly in Ireland and we have decided that we will attend this one.  As you head into your 60s you realize that you don't have forever.  Life seems awfully short and friends become increasingly important.  My husband has known his friend from Ireland for about 45 years!  We have visited he and his wife in Ireland and they have visisted us here in Canada.  We value this friendship and that's why we are going to this next wedding.   Part of the wedding festivities involve staying at Ballynahinch Castle for 2 nights!  Should be some wedding!  I'll post photos when we get back.

Like What He Likes?

Today I'm going with my husband to play duplicate bridge.  Now, I've played rubber bridge for a long time.  Several of our couple friends play and it is a pleasant way to spend an evening.  My husband has been trying to convince me to start playing duplicate bridge.  He's been playing for several years.  He has other partners but he would like me to be available when the others aren't.

I've been resisting.  The idea of playing with complete strangers, some of whom are determined to win more Masters points just doesn't sound like fun to me.  Also, it means having to learn and remember a whole lot of conventions.  Again, that doesn't appeal either.

Well, today I'm going with him.  I figure that as we age, it will be good if there are activities we enjoy together.  He notes that there are alot of older people who play at his club; it provides them with both mental stimulation, as well as social contact.  I'm a little nervous, but in the end I will probably enjoy myself and I know it will please him no end.  Now all I have to do is figure out what the quid pro quo is going to be!

The Bucket List

I was talking today with an old friend.  We were discussing Ireland; we both have ancestors who lived in Ireland way back.  She was telling me about her personal "bucket list".  One item on her list is to visit Ireland.  I realized that this topic fits in with my last post (which was awfully long ago); it was about figuring out how to have enough money to live on in later life while also using some of those savings to enjoy life.

I do have some things I want to do before I die but they've just been floating around in my brain.  I think I'll take it to the next step and actually create a word file with the list identified.  By doing that I figure that it will help me to priorize them, to cost them, and to then negotiate with my husband!

There comes a point in life where saving for the future isn't as important as it used to be and where using time wisely increases in importance.   In retirement, we gain the freedom to pursue our dreams so get on with it!  I'm going to.

It's Time to Spend Money!

The other day I read an article in the paper written by a financial planner about a fictional couple.  She was 64 and her husband was 74.  The article focused a great deal on how they need to continue to save money!  They already had quite a large amount in savings and owned a mortage free house.  It really annoyed me.

There was nothing about how they should go about spending their savings.  The average age of mortality is 78 and this guy is 74!  He may only have a few years left and they want him to continue to save money!  I'm not suggesting that people should rush out and spend all their savings; what I am suggesting is that there comes a time when spending your money (and enjoying what life there is left) just makes sense.

This is especially true if you don't have children.  We don't and a few years ago we decided to add a dream kitchen to our house.  I'm a serious cook and had been working in a terribly small kitchen for years.  We decided to use a Home Owner Line of Credit (HOLC) to finance the project, with NO intention of paying back the loan.  That's right; no intention of paying back the loan.  We essentially used the equity in our house to enhance our daily quality of life. It is 3 years since we did it and we are still enjoying the space every day.  We make the interest payments every month; that's all.  There is still a large amount of equity in the house and if we both die, our relatives would still inherit a good deal of money. 

Financial planning in retirement needs to involve a hard look at how much money needs to be protected for the future and how much can be spent now.  I'd like to see a few more planners recommending that people spend some of their savings while they are still young enough to enjoy it.

Selfishness

I am slowly developing a theory about aging that I don't really like.  In general I resist the notion that as people age they become cranky, hard to get along with, self-centred and rigid in their views.  Whenever someone tells me that they think that older people are overly self-focused I feel the need to point out that personalities don't change all that much over time (as confirmed by many studies in psychology).  It follows that anyone who is selfish later in life probably always was.

However, I am collecting anecdotal information on this issue and this has prompted me to question my defence of the elderly.  First of all, my husband has been fully retired for many years.  One of the most common views about retirement and one of the things that people say they look forward to the most is being able to "do what I want to do when I want to do it".  My husband certainly lives by this creed.  The bulk of his time is spent doing what he wants when he wants.  What I've noticed is that the more he has had the freedom to live this way, the more he wants to.  In other words, if there is something I want him to do (or something someone else wants him to do), and it doesn't perfectly align with what he wants to do, then we have a problem!!  Getting him to shift off his agenda isn't easy.  It stands to reason that if, in retirement, most people are able to indulge themselves doing what they want, there may be resistance to giving this up in order to please someone else.

The second phenomenon I've been noticing has to do with people my age who are trying to help their parents.  A youngish sales woman the other day told me that her parents live in a small town in Quebec and are reaching a point where they can't really manage a large house and property.  Her mother accepts that it is time to downsize and to perhaps move closer to their daughter in the city.  Her father doesn't see it this way at all and is extremely reluctant to sell, to downsize and to move.  Their daughter is a single parent and is trying to juggle fulltime work, being a mother, and also caring for her parents at a distance.  While she understands her father's reluctance, she feels he doesn't appreciate how hard it is for her to help them when they live two hours away.  He doesn't seem to be taking into account the impact of his choices on her.

I do believe that it is important in later life to be living in the place you want to be, but it is also important to appreciate the impact of your choices on your adult children who really want to be of help.  Decisions around where to live should, at the very least, take this into account.

Wills

I can't remember the exact percentage but about half of adult Canadians don't have a will.  Several years ago, my brother revealed that he and his wife didn't have a will.  At the time they had a daughter under ten.  I was shocked that they didn't.  I encouraged him to go and do it; he didn't.  I pointed out to him that if he and his wife died together, that their daughter would, first of all, become a ward of the province and secondly that she would inherit their estate at age 18.  Imagine someone at that age coming into considerable wealth at such a young age.  He didn't seem to be at all aware of the implications of dying without a will.

In the end, I decided to give him a gift certificate for $100 towards getting a will.  In Canada, a simple will costs about $250-$350.  It is such a small investment in such an important document.  He and his wife eventually did get to a lawyer and now they have both wills and Powers of Attorney in place.  It is true that in deciding to put a will in place does require one to think about death and dying.  As noted in one of my other posts, this is an issue that many people have great difficulty confronting.  Perhaps this explains why so many people avoid having a will.  My view is that, if your loved ones are at all important to you, then putting a will in place is a no brainer.  For a relatively small investment, there are siginificant dividends for your loved ones after your death.  And I don't mean in terms of wealth, but rather in minimizing the stress that comes with having to settle your estate at a time when grief is the greatest.

Hard to Avoid Dealing with Death

I have noticed that when someone dies, most people talk about the person "having passed" or they talk about having "lost" someone.  Saying that someone "died" is not that common.  In our society, confronting death in a straightforward manner is something that we all seem to avoid.  In my seminar, I find that I have to force myself to use the word "death" because it seems like such a harsh reality to raise with the group.

However, as somone who is now over 60, I find that having to deal with this reality of life is more and more difficult to avoid.  Friends are "losing" their parents; see even I do it.  One friend has recently lost her younger brother.  He was in his fifties.  Women friends are becoming widows, and at a pretty young age.

These events force us to confront our own mortality.  For me, they also provide an opportunity to learn about grief.  What I have noticed is that everyone seems to deal with it differently.  Some individuals seem to opt for the very British "stiff upper lip" approach, getting back to "normal" life as quickly as they can.  At a dinner with high school friends last night, one of the women who became a widow in her forties, said that she sought relief from her grief in work.  I have another friend who found that her interest in work simply disappeared.  One friend needed therapy once a week for a year in trying to deal with the death of her much older husband. Some people hang onto as many momentos as possible.  I did this when my parents died four months apart.  In clearing out their house, I found that I wanted to keep all sorts of weird things, like my Dad's aftershave.  It's been almost ten years now since they died, and it is only now that I am trying to weed out what I've kept.

Dying is part of the journey of life (I'm sure I'm not the first person to state it this way.) and it is wise to learn to confront the reality and then to decide how to best cope with its inevitability. 

Travelling with Max

Just thought I should provide a follow-up to my post about doing a business trip accompanied by my husband and my dog.  More about husbands later.  In this post, I want to report on our experience travelling with Max. 

I was quite surprised to discover that a very upscale vintage inn in Niagara-on-the-Lake actually had what they call dog-friendly rooms.  Ours was at the back of the hotel and instead of walking out our hotel room door into an internal corridor, we walked onto a covered porch area that bordered the back parking lot of the hotel.  We could head out for walks without having to go through the hotel.  It was very convenient and worked very well.  The only catch, when we checked out we discovered something they didn't tell us up front - we were charged an extra $35 per day to have the dog in our room!!  In the hotel information book, it referred to a "small" fee; we were quite taken aback to find that it added up to over a $100, what with taxes, for our 3 day stay.

At the next hotel we visited in Huntsville, we were also able to bring the dog into our room.  This time we were on the second floor of the hotel and had to go through the hotel to get outside.  However, there was no extra charge for having the dog in the room. 

Now I do have to confess that Max wasn't the perfect traveller.  He was a little thrown off by luxury inns, staying in the Guelph home of our niece with her very shy rescue dog, walking through the corridors of a hotel, and spending time in a retirement residence where we visited my husband's aunt and uncle.  This led to a few "accidents".  However, all in all he really did behave himself and we discovered that we could in fact travel successfully with him.  He did enjoy himself as well; he had his first off-leash run on the commons in Niagara-on-the-Lake and generally displayed a sense of curiosity and adventure during most of the trip.

We are not in a rush to do it again but we do feel confident that Max is an adaptable little dog and will have lots of travel adventures in his future.

Investing in Relationships

I have to do 2 retirement seminars out of town and we have decided that my husband, along with Max, our miniature daschund, will come with me on this road trip.  Part way through the trip we will spend the weekend with his niece and her husband.  Since my husband and I have no children, it is important for us to cultivate and maintain a close relationship with those in the next generation within our family.  Of our 4 nieces, one lives close by, one lives about a 6 hour drive away and the other two live thousands of miles away.

When the niece who lives a 6 hour drive away was in university in Montreal, we encouraged her to visit us on long weekends and she did.  We have gotten to know her quite well as a result.  Both she and her husband and my husband and I make an effort to keep in touch.  Her husband sends us a monthly newsy report on what they are up to, we talk on the phone regularly, and also make an effort to have face to face visits as often as we can.

Good family relationships don't just happen; it takes a commitment and personal effort to nurture and strengthen these relationships.  One of the joys of retirement is that individuals have more time to devote to the important people in their lives.  We are really looking forward to visiting with our niece and her husband while on my seminar trip and I know that it is an investment of our time that will strengthen our ties within them.

Widowhood

The average age of widowhood in the US is 56.  In Canada it's a little higher.  It is still shocking to consider that women who have a partner may very well spend some or all of their retirement alone.  I have six friends under the age of 60 who have already become widows.  Only 1 has remarried.  When talking with couples about their retirement it is tough to raise this issue but there is such a strong possiblity that it is going to happen that I feel remiss if I don't raise it.

From my perspective both as a professional retirement planner and as part of a couple, I believe that it is important for couples to take this possible reality into consideration as they do their planning.  Part of this planning involves estate planning, i.e. making sure that wills are in order and that all relevant paper work is done and its location known.  One of my friends couldn't find her husband's will when he died and another had a husband who didn't have a will.  This can cause needless stress at a time when the grieving process is in full swing.

It is also important to make sure that there is a support network in place.  It is fine to be fully supported by one's husband but if he dies, do you have strong family ties and/or very good friends who will also be available and willing to help.  If ever there is a time when support can help, it is when you lose a loved one.  Being prepared to ask friends and family for help is a key element in surviving through this difficult time.

Decisions about where to locate in retirement should also take into account this phenomenon.  My husband and I lease a cottage on an island and I am fully aware that if something happened to him, it would be difficult if not impossible for me to continue to go there.  As opposed to just not thinking about it at all, I do consider how I could conceivably continue to lease the cottage (I could only do it if I had people who could be there with me as I know that I wouldn't enjoy being there alone at night) but I also face the possiblity that I would have to give it up.  That would end up being a terrible outcome as it would mean not only losing my spouse but also access to a very special place.

I know that it isn't always easy to plan one's life and it's true that we never really know what is going to happen and when.  However, devoting at least some time to facing such a reality can prepare us to deal with such a difficult transition more easily.

Summer Musings

We spend a good part of our summer at the cottage, with short trips home as required or desired.  This partially explains why there haven't been any new posts for some time.  I suspect that our sojourn at the cottage is somewhat like the experience retirees have who decide to spend time away in the winter; we have several friends who are doing that.  We thoroughly enjoy the relaxed atmosphere, the time for visits with family and friends, the access to all that a lake has to offer during an Ontario summer.

However, for my husband perhaps more than me, being at the cottage has its downsides.  It keeps him from many of the activities he enjoys when we are at home, such as playing squash twice a week with a group of men that he has been playing with for many years, enjoying a golf game with his city friends, being able to go to a movie or watch a sports event on TV (we don't have electricity at the cottage so no TV).  Luckily for us we have a circle of friends on the lake and in the vicinity of the cottage but we still miss our close friends in the city over the summer months.

If you are planning to spend some of the time in retirement away from your home base, be aware that while it will bring many benefits, there will also be downsides.  If you have a partner, it is a good idea to discuss how being away for a few or many months at a time is going to affect your activities and your relationships.  It is also worth exploring how you can have your cake and eat it too, i.e. be away but maintain good contact with those you care about back at home.

Can you overcome aging?

My brother-in-law and his wife visited us at our cottage recently and she and I had a very good "dock" discussion.  She is someone who has always been interested in the spiritual side of life and she told me that she is exploring, through her regular meditation, the aging process, and how she can take charge of her own aging.  She believes that the power of the mind may be such that she can actually fend off some of the symptoms of aging this way.

There is certainly quite a bit of research that indicates that, if we use our mind well we can control, to some extent, our state of health, both mental and physical.  While not really disagreeing with her, I noted that there does come a time when it is healthy to accept a newly developed limitation flowing from the aging process and that fighting against such limitations, just means we are in denial about the aging process.  I am fascinated with where one should draw the line between fighting the aging process and yielding to it.  If one wants to age gracefully I think it's important to accept this fact and to adapt accordingly.  A good example involves knowing when to give up driving.  This is a tough decision to make and those individuals who make the decision themselves demonstrate what I'm talking about.