Research by “Which” has provides some clarity on what we need for a comfortable retirement.
They discovered that retired couples found they needed an average of £18,000 a year to cover household essentials like food, utilities, transport and housing costs. This increased to £26,000 a lifestyle that included a European holiday and leisure activities.
To generate £26,000 income a couple would need a pension pot of £210,000 in today’s money, alongside their current state pension.
So, for entrepreneurs this could provide a target for a business valuation of £250,000. At this level (assuming you qualified for Entrepreneurs Relief) you would pay £25,000 tax on the sale and be left with £225,000 after tax.
So, it could be an idea to get your business valued but don’t be surprised if you find there is no or minimal value. The reality is that 90% of businesses never sell, they just stop.
If you find your business cannot be sold then you’re going to need to start saving. The earlier you start the better, here what you need to set aside each month depending on your age:
- £131 a month from age 20
- £198 a month from 30
- £338 a month from 40
- £633 a month from 50
If you think you need to look at your business value or profit so you can put more into your pension get in touch.
Image from Flickr by Pug50.