Start with the end in mind. When mentoring fledgling shop owners, I often tell them we must start with the end in mind. I want them to tell me what they imagine their company will be next year, and then ten years after that right up until their retirement 30 years hence. In all that time, very few actually had a legitimate retirement plan in place. We Americans are not that great at planning and saving for retirement. Depending on the source referenced, over 40% of retirees rely solely on their social security income.
When I began my career, I had many ideas about what my retirement was going to look like. I knew the source of my income and my projected expenses. None of those ideas worked out as I had envisioned: none. It wasn't due to a lack of planning either. I always left myself a back up, and I lived very modestly. I’ve only owned one new car in my life, and it was a 1988 Honda Accord. My grandparents used to say an old Yiddish Proverb: “Der mensch trakht un Got lakht" which translated means “Man plans and G-d laughs.” Little did I know how right they were.
My first plan was to retire from the airline I worked for 20 years. Mandatory retirement age for pilots was then 60 years old. The retirement plan was a Defined Benefit Plan where retirement payments are guaranteed by the Pension Benefit Guarantee Corporation (within some limitations). While working there the airline declared bankruptcy (twice) and that money was gone.
Strike one.
The airline gave us pilots a choice: surrender the retirement fund to the PBGC or they would liquidate the airline, not reorganize—liquidate. The DB plan became a DC (Define Contribution) Plan where contributions to retirement accounts are made without any guarantee. Lovely. I still had hope though because President George W. Bush signed legislation raising the retirement age for pilots to 65. Cool, I could work five years longer than I had planned and make some of the money back that was surrendered to the PBGC during bankruptcy. I could retire with a reasonable nest egg. Not champagne and caviar, but not Ramen noodles and two-buck chuck either. That was until the Leukemia scare and the revocation of my medical certificate.
Strike two.
My license to fly was still valid, but I couldn’t exercise it’s privileges without a valid medical certificate. No flying, no flight pay, no duty pay only a small disability check to cover the mortgage. Time to pivot, again. Fortunately, I had started my auto repair business as a backup plan out of my garage and then moved to my friends shop where I rented a bay. He was a one man operation, so it was perfect. I worked seven days a week for nine years only taking time off if I were sick, sometimes because of the chemo. I was slowly building a real business. Things were looking up until he decided to put the business up for sale.
Strike three.
I was blindsided. I never expected that. I had a choice: I could buy him out and rent the building or start over again at 45 years old. I chose to invest in myself. I leveraged the equity in my house and I bought the business. Over the next few years, I hired some employees and began growing it. I was able to buy the building and come up with another retirement plan that left me with options. When it was time for me to retire I’d: 1) sell the property and business and walk away with a tidy sum, or 2) I’d keep the property and sell the business collecting rent as an income stream or, my last choice, the choice I hated 3) sell the building and liquidate the business. Sounded like a plan and then “Got lakht.”
COVID hit and I postponed my plans for three years, figuring I’d retire when I’m 68—except somebody made an offer on the property that I couldn’t refuse. I performed a business evaluation, hired a property appraiser ,and countered with the figure I wanted, confident I would be told to go pound sand. Surprisingly, the buyer accepted. I was lucky, I made some good choices, and it worked out. The sad truth is that’s rare. According to Steve Forbes, 80% of businesses don’t sell.
Moral of the story: leave yourself options but start planning now. Don’t wait until it’s too late.
