Are you on the path of a practice only retirement plan? If you’re not sure, or if there’s a question that you’re curious about, you might want to keep listening. A practice only retirement plan is where you’re a business owner that is relying very heavily on the future sale of their business to fund their retirement. What we often see is that people get into this five to seven year rolling time period to where they want to be able to exit.
And there are factors like they don’t know how much the business is worth. They don’t know how they’re going to go about selling it. And then when they do go to sell it, well, now they’ve got cash to where maybe they have to pay capital gains on it. And then what do they do with this cash to produce income? Oftentimes it could be enough and there’s other times it might not be enough. It just depends on how dependent your business is on you, how well your business was doing prior. And now you’re going from a position of depending on income from the business, the profits to now relying on whatever the business sold for.
This can be a scary situation for a lot of people because, well, you’re now in a spot where you’re dependent on getting as much as you can from the sale of the business. Maybe it puts you in a position to where you have to work longer because, you’re just not gonna have enough money, or you have to dramatically reduce what your expectations are for income and retirement because it’s just not enough. Well, how do we circumvent some of this?
Well, there are a lot of videos and things that we’ve talked about where, hey, you can be able to have your business build personal wealth for you. But the biggest kicker here is making sure where does your business fit into the grand scheme of everything? If you don’t know what play or how much of your business makes up your retirement plan, now is the time to start considering that because you might want to start de-risking from your business outside of your business to other different buckets that have tax advantages to them. Maybe a little bit more risk, counterbalance some of the risk and add some guarantees into your plan along the way. And then you could probably sell your business for less if you have a retirement income plan that is balanced. Most people, they rely very heavily on some kind of interest or dividends from an investment. If you own real estate, it can be very simple to, “hey, I’m going to collect a check for rent over time, maybe I triple net lease this property.”
But then as you get further into retirement, you might be like, “I don’t want to deal with this anymore. Is there a better option and that can be able to create a consistent check?”
But then as the property has issues, you might have to come out of pocket. And it’s the same thing. Like if you take your money and you put it into the market and you’re living off the interest, but the only thing the market is that if the market is down in a month, you start taking from your savings, your investments. Well, now you’re going to start actually depleting what you have saved faster. So how do you calendar balance that?
And that’s where you should have a retirement plan in place to where it focuses one on is there an area that can’t control all of your needs? So you have basic necessities in life where, hey, I got to pay my bills where it’s like maybe I have a mortgage, I have electric, I have insurances. Then you have an area where you want to be able to spend your money. So I want to be able to spend it as I please. Maybe I want to spend it all. And unexpected things pop up. Health is a big factor as we get older. How do I control if I have a big expense that pops up?
But the issue here is, “Well, if I spend a lot of money and then I only have whatever I have left for needs, well, what do I do?”
That’s where another bucket can come into play to be able to replenish that. And we call that your true liquidity, or you call it your rich uncle. Say at a future date, all of a sudden you get a big lump sum of money, then can you replenish all these different areas that you spent? If you’re depending on your business for retirement and you haven’t considered trying to spread the risk, diversify a bit more to other assets, maybe you should take a step back and take a look at this.
Happy to chat with you to see if there’s anything that we can do to help.
Video Summary:
Many veterinary practice owners have a “plan” for retirement that hinges entirely on selling their business. On the surface, it seems simple—you work hard, build value, then cash out when it’s time to step away. But this practice-only retirement plan comes with major risks.
Your practice’s value can fluctuate based on market conditions, buyer interest, and industry trends. Even if you sell for the amount you hoped, taxes can take a big bite out of your proceeds. And turning a lump sum into steady income that lasts 20–30 years is far more complicated than most realize.
The smartest approach? Start building wealth outside of your business now. Use tax-advantaged accounts, diversify into other asset classes, and create multiple income streams. This proactive planning reduces risk, gives you flexibility, and ensures your retirement lifestyle isn’t left to chance.
Your practice is valuable—don’t make it your only retirement plan.
This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Tom is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Florida Veterinary Advisors and The Next Step Planning Group are not an affiliate or subsidiary of PAS or Guardian. California Insurance License #0K80141. AR Insurance License #15823672. Florida Veterinary Advisors is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. The individuals associated with Florida Veterinary Advisors do not maintain specialized licenses or qualifications for the financial services provided to veterinary professionals. 7989827.1 Exp 5/27