Retirement Planning

Discussion in 'Business Operations' started by britsteroni, Nov 17, 2012.

  1. thomas.creation

    thomas.creation LawnSite Member
    Messages: 43

    You hit the nail on the head. In these times many investors are looking for brick and mortar investments, also know as rental property. My two last properties purchased are showing 30% returns. With bank financing I'm able to purchase $100k worth of property for $20k and have a ROI in 3 years.
  2. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    You could give people all the statistics in the world, and unfortunately most won't listen. One of the most staggering that I have found is that 75% of Americans nearing retirement age have less than $30,000 in their retirement accounts. Another statistic that is hard to imagine is that 70% of the population could not come up with $1,000 cash if given a month to do so!

    From my own personal experience working with small business owners, the numbers might indeed be worse compared to the average W-2 worker. Most have little to nothing saved at all. Most live paycheck to paycheck. Most spend as much or more than the earnings they take from their business.

    [/QUOTE]Investing in one's self is great, if your personal wealth generator is the best thing going. When talking about "putting the money into my business," remember all the thread on LS that speak to "how much to buy out another LCO." In general, buyers aren't willing to pay much for either accounts, or hard assets. I'm doubting this business is very high on the scale of "cashing out."[/QUOTE]

    The above is really good advice that everyone should take note of. It is true that lawn care, like any other business, can be built into a self-sustaining operation that exists outside of the owner. But I would guess that would be less than 1% of the members on lawnsite.

    So when you say "I'm investing myself, my biz, equipment, etc", how is that going to reap greater rewards for you and your family in the future? Most all equipment purchased in this business has little value after it has been used a few seasons. Accounts are difficult to sell for top dollar. Most lawn care operators do not own a shop or commercial real estate, so selling that is out. So when you boil it all down, most of the assets necessary to operate in this business sector have very little real value outside of the cash flow provided to the owner.

    It is very admirable to build a large, sustainable lawn care operation. But even if that is your goal, you should still make it a priority to set aside some of your take home pay for a rainy day.
  3. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    I would agree with your assessment of retirement. Who wants to sit around on the couch all day and do nothing? I have watched my grandfather in retirement (he has been retired for my entire life) and think it is both depressing and boring. I also know others who have retired only to get bored and then go back to work. I plan on doing some sort of meaningful work as long as my mind and body are capable.

    Maybe a better phrase would be life planning? Or financial life planning? Even if you plan on working until you expire, don't you think some planning would be prudent?

    I have a son who is only seven months old. I, like you, hope that when he grows up we can work together and then eventually pass the business on to him. But what if he wants to be a doctor? What if he wants to be a pastor or missionary? What if he wants to study computer science? What if he wants to work in one of the trades?

    I'm not trying to pick on you, but I think you brought up some excellent, common objections. Financial planning is an ever evolving process that changes as we all age. Life will never work out exactly how we plan or would hope for it to, but to have no plan at all doesn't seem like a good alternative either.

    I think what most don't realize is that life happens. You wake up one day and your body just doesn't work like it used to. You might not have the physical or mental capacity to continue to work into your 70's and beyond. So for all folks who make it to that age and haven't planned and saved accordingly, they wind up dependent on the government and/or family.

    Maybe Mike Tyson has the best quote of all for planning: "Everyone has a plan 'til they get punched in the mouth." :)
  4. Roger

    Roger LawnSite Fanatic
    Messages: 5,943

    Those are the kind of statistics I was thinking about. Yes, they have been circulated for a long time, and obviously most don't listen because the statistics don't change.

    I agree that "retirement" is not an appropriate word for a change of seasons in the workforce. I smile when I read comments about those intending to work until their final breath, hoping they will pass while sitting on their ZTR. There are way too many unknowns, including financial setbacks, family situations, and health.

    As people reach 60, 65, and 70, the #1 concern, "Will I run out of money?" This is a well-known statistic. When the safety net becomes necessary, an individual looses all control. Others are making decisions for you, decisions that may be very disconcerting.

    As for "working until I die," that takes many forms. There is great value in remaining active. I've seen too many people my age "fold their tent" after work life, and their name is in the obit column a few months later. On the other hand, I've seen others take on a new career, remaining productive, keeping physically active, and keeping mentally active. Family situations vary greatly. I saw an article this past week that said 30% of those over 65 are active in the workforce, a percentage that is higher than ever, and continues to grow. The reason is financial, not a desire to remain active.

    Two of my present customers are cases of "warehousing Mom and Dad." Adult children are buying houses for their parents, as a place to have them close, and live out their last season. I use the term "warehousing," because that is exactly the nature of the issue. Adult children need to find a place close by, so they can care for their parents, yet giving the parents some independence. It is the next step to moving to a structured home, either as independent living, or assisted care living.

    The demand for financial resources in later years has risen steeply in recent years, and will continue to rise. The average cost for a care home is $96,000/yr. With continued changes in medicine, and the desire to remain living longer, the costs to support elderly will grow.

    Also, the costs for professional help are significant. Accountants and financial planners are necessary to navigate the complex taxing structures regarding retirement monies. The government rules in handling these matters is a maze. Attorneys are necessary to assemble documents associated with trusts, foundations, living wills, etc.
  5. RussellB

    RussellB LawnSite Fanatic
    Messages: 8,755

    Most of us like to buy stuff. That boat sitting in the yard, atv in the shed etc getting used a few times a year while making payments on them is a huge drain on the household. Selling just those two items even at break even cost of what's owed will most likely save you $1,000/month or $12,000/year not including insurance/ maintenance costs. A two pack a day smoking habit (you can do the math), going out to dinner versus cooking at home are just a few other areas that if cut will save you lots of money. Sell what you can and use that money to pay off the credit cards, change some other habits and then direct all of that money into a savings/retirement account. You will not miss nor regret doing it.
  6. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    I think the other problem is that people do not value services without getting something tangible in return. When preparing tax returns, some may claim that the fee is too high, but at least they have a copy of their tax return to take home with them. With tax planning or financial planning, it becomes difficult because what is being "sold" is knowledge. For whatever reason, people despise paying for knowledge even though it has far greater value to the bottom line than the preparation of the tax return, bookkeeping, payroll, etc.

    And in the above scenario lies the paradox, the people who need the guidance the most either are unwilling to pay the professional fees or cannot afford to. The entire financial planning profession caters almost exclusively to the already wealthy. The obvious reason being those folks have the money to pay the fees.

    But it is the chicken or the egg paradox. Did the client become wealthy because they had professional advisers all along the way? Or did they acquire advisers after becoming rich? I think it is the former. Good business men and women recognize the need for competent advisers along the way. If you look at some of the more successful business owners here on lawnsite, there seems to be a common theme of professional continuing education and focusing on the areas of the business they are good at. "Work on the business, not in it."
  7. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    If you have declining physical or mental health financial planning will not make you better. My phylosophy is why stash money away for a day that may never come? I will work until my body won't let me, hopefully I don't die on a mower as I don't think my customers would appreciate that very much. As for being financially well off to "not retire" but find another job, what does that mean? I love what I do, so I'll agree that being stable with finances is one thing, I will never stop working and this will be something I pass one to my kids like my father did for me. No matter what they choose to pursue in life.
  8. newguy123

    newguy123 LawnSite Bronze Member
    Messages: 1,096

    Good for you. I'm probably a couple years behind you but that's the exact strategy I'm using. I think rental properties are the most solid investment. Plus the taxes made on real estate rentals are the lowest of all three types of income.
  9. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    The point is that having a financial plan and saving regularly will make life easier for your LOVED ONES in the case of declining health or death. It's about loving your family enough to make arrangements to the best of your ability to provide for them should something happen to you.

    There have been over 400 views and only a few replies. What are the rest of you lurkers doing for your financial future?
  10. Roger

    Roger LawnSite Fanatic
    Messages: 5,943

Share This Page