You Have Options

What if you could provide cash for your family in the Beware of
event something happened to you and the business
declined?
Business Financial
What if there was a strategy for tax-free accumula- Hazards
tion outside the business, with tax-free future income? Part 3
What if you could supplement your retirement while No Buyer at Retirement, Death or Disability
shifting some business assets away from future credi- Before Retirement, or Untimely Market Changes:
tors? Will You Have Enough to Retire?
What if these strategies could also improve the per-
formance of personal cash, or safe assets (CDs, etc.)? Your Business
What if you could fund such an arrangement for the Successful business owners all across the country
cost of one (or less) of the employees on your payroll? heavily invest their time, labor, and capital in their busi-
ness. For many, their business is a major asset that they
What if there was a way to create the dollars needed
plan to use to fund their retirement. Without the busi-
in the future for pennies on the dollar today?
ness, they could be at risk of not having enough money
Let’s Talk for their financial goals and retirement, or for the finan-
cial security of their spouse and children when they are
There are several powerful strategies that can help gone.
you accomplish these, and many other, business plan-
ning goals. Let’s sit down and talk and you can decide if Do you reinvest a large portion of your income in your
any of these strategies might be of interest to you. business to sustain or grow it? What percentage of your
personal net worth is tied up in your business? How
Ardal Powell, MA, PhD many months could your family live on non-business as-
New York Life/NYLife Securities sets and income sources? What is the value of your op-
460 Temple Hill Rd erating business? What would be the value of the assets
if you had to liquidate them? How would you fund retire-
New Windsor, NY 125534
ment if you were no longer able to run the business?
(845) 202-9722
apowell03@ft.newyorklife.com
New York Life Insurance Company, its agents and employees may not provide legal, tax or accounting advice.
Consult your own professional advisors before implementing any planning strategies. © 2018 New York Life
Insurance Company. All rights reserved.
SMRU 1778943 (exp. 06.30.2020)
Advanced Planning Group
 What if there was no ready and willing buyer? What if
the economy changed and your business faltered right
before, or during, retirement?
Many business owners are focused on the rigors and
activities of daily business sales and operations. They
often haven’t diversified assets outside of their busi-
ness as a backstop to protect their retirement. How
much could your retirement be affected if you were un-
able to continue running the business, or if you were
unable to sell it?
Let’s look at a hypothetical example.
If you had to sell your business but couldn’t,
how much would that impact your retirement
and your family’s financial security?
TireMart, LLC has successfully served the drivers of
northeastern Citytown for years. TireMart’s owner, Ed,
built the business from scratch. He has long preferred re-
investing his income in his business instead of the stock
market. Most of Ed’s net worth is tied up in the business.
He plans to sell it to fund retirement for he and his wife,
Susan. Ed estimates TireMart to be worth $3 million with
business assets and real estate equity totaling $1 million.
If something happens to Ed (death, disability), there is
no buyer when the need to sell arises or the business fails,
Ed and Susan might not have enough for retirement!
Let’s Look at the Numbers
Without the operating business, Ed and Susan
might have to fund retirement by selling business as-
sets. Let’s look at how long their retirement income
would last if that were the case.
$3,000,000 (estimated business value)
If no buyer or rushed need to sell:
Asset liquidation!
$1,000,000 (value of business assets)
x 75% (lose 25% to rushed sale/distressed cash
needs)
$750,000 (proceeds of business asset sale)
x 80% (lose 20% to capital gains tax; assuming $0
basis)
$600,000 (only 20% of estimated business value!)
÷ $150,000/yr (desired annual retirement income)
4 years (retirement income from sale of business
may only last 4 years!)
In other words, without proper retirement and suc-
cession planning, even a successful company might on-
ly be able to produce pennies on the dollar for retire-
ment (in this case, 20% of company value!).