"The sale of a business or real estate is one of those," says Chris
Snyder, co-founder with Ashoo of Pillar Wealth Management. "With the
right planning, it can become your ideal retirement."
Unfortunately, sellers often make fundamental mistakes: They
underestimate how much money they'll need for their retirement; they
overvalue their business or property; and they often fail to
properly invest the proceeds in a diversified portfolio of equities,
bonds and money markets for income.
How can you turn your business or property sale into your ideal
retirement? Snyder and Ashoo offer these tips:
1. Determine the retirement lifestyle you desire and how much
money it will cost.
If you don't know how much money you'll need, you can't identify
how much you need to net from the sale, Ashoo says.
"How many homes will you have? Do you see yourself traveling?
Creating a charitable organization?"
Create a detailed list. How much money will it cost you each
year? If you retire at 55 or 65, odds are good you'll enjoy a 30- to
40-year retirement. How much will you need for that length of time?
"When you meet with your wealth manager, insist on running that
number through 1,000 different ‘launch' scenarios — what we call a
‘space shuttle' analysis — to test whether it will meet your
expenses under a wide variety of market and world conditions," Ashoo
"You can't rely on an Excel sheet analysis based on fixed rates
of return and fixed expenses for the rest of your life. It's a sure
way to financial disaster because there's no such thing as zero
2. Get an objective valuation of your business or real estate.
Very often, Snyder says, he and Ashoo work with clients who have
a vastly inflated idea of how much their business or property is
worth. When they decide to sell, they either can't because no one
will pay what they're asking, or they get far less than they
"People often attach an emotional value to the asset,
particularly a business or legacy real estate," Snyder says. "Hire a
merger and acquisition professional to provide you with a real
market valuation for your business, or a real estate appraiser to do
the same for property."
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If the value isn't where it needs to be, you may need to make
some lifestyle changes or hold onto the asset longer.
Another caution: "If you performed step 1 thoroughly and you are
confident you need $15 million for your retirement and someone
offers you $20 million, take it," Ashoo advises. "Don't hold out for
$23 million just because you think that's what it's worth."
3. Invest the proceeds prudently and in a way that will generate
Once your real estate or business is sold, you need to build a
diversified portfolio of equity, bonds and money markets that will
balance your risk and generate an income, Snyder says.
"Modern portfolio theory holds that 93 percent of the return on
your investment is based on your mix of these asset classes," he
Adds Ashoo: "But prudent investing entails not accepting more
risk than is required to achieve your retirement lifestyle."
Don't rely on a simple risk questionnaire to make that
determination for you, the two say.
Again, have your wealth manager run your portfolio through a
"space shuttle'' analysis to test how it will perform under many
Chris Snyder and Haitham "Hutch" Ashoo are co-founders of
Pillar Wealth Management, of
Walnut Creek, Calif., and co-authors of numerous published works,
including "Exiting Strategies: The CEO's Seven Critical Steps To
Cashing-Out of a Business, Managing and Preserving Wealth,"
available as a free download at their website. The two specialize in
customized wealth management advice to affluent families. Their
unique five-step consultative process for new clients ensures they
have a deep understanding of clients' goals. The two have a combined
51 years of experience.
[Text from file received from
News and Experts]