Taking steps to think about your future income needs in retirement can be more complicated for business owners due to the multiple different areas that they need to consider, and our investment advisors in Nanaimo can help. Rather than keeping your business and personal future financial needs separate, it is usually better to consider both aspects in conjunction with each other in a holistic manner. It is likely that your objectives in each area can work together to achieve your broader financial retirement goals. There are a few key sources of retirement income that are of particular worth for small business owners, as follows.

Investment Portfolio Qualities

via KAI Asset Management Inc.

Investment Diversification

Diversification across sectors and asset class

Sector Focus
• Financials • Industrials • Healthcare
• Consumer Products • Enterprise Technology

Targeted Assets
• Stocks • Bonds • Real Estate
• Private Equity


Global Reach and Transparency

Companies that have international scale exhibit certain desirable traits

• Geographic diversification provides protection
• Transparent and strong corporate governance
• Ability to grow into new markets

Stability and Strength

Companies that exhibit financial strength and business stability are paramount

• Strong balance sheet
• Conservative use of debt
• Requires minimal capital to maintain
• Consistent high free cash flows
• Competitive moat and pricing power

Proven Leadership

Management can turn a good investment to extraordinary with skilled capital allocation. We assess management by analyzing the following:

• Mergers & acquisitions success
• Business re-investment results
• Share buyback execution
• Dividend history

These are for illustrative and information purposes only and were created by KAI Asset Management Inc. for the sole purpose of KAI Asset Management Inc clients and one should not take it as investment advice or instruction.

Equity in Your Business

The equity that exists in your company can be used to help to fund your retirement in different ways. Firstly, selling your business is one option. If you go down this route, it’s worth consulting with a tax professional first to ensure that the sale benefits you from a tax perspective as much as is possible. For example, the sale could benefit from a $866,912 capital gains exemption if the business meets certain criteria.

Of course, you may prefer not to sell your business. You may choose to pass it on to your loved ones instead. You can still receive income in your retirement through dividend-paying preferred shares that you own if you take this option.

Non-Registered Investments

Many small business owners also see the benefits of investing in a personal investment portfolio to add to the income that they make from their company. Your choice of investments may differ depending on the type, age, success, etc. of your own business. For example, you may be happier to take a more risk-oriented approach with your investment portfolio if you own a stable company with solid revenue generation and vice versa if you own a start-up company.

Registered Plans

Registered Retirement Savings Plans (RRSPs) or Individual Pension Plans (IPPs) can be a valuable investment option for business owners. You can make the most of tax deductions on contributions to the plans and your earnings will grow on a tax-deferred basis whilst held within the plan.

Another good option worth considering is a Tax-Free Savings Account (TFSA). You can use it as a means to save for retirement on a tax-free basis as the funds held within it are never subject to tax.

Retirement planning is a key process for small business owners and a written document which details your intentions and goals is a great way to ensure that your plans stay on track.

Individual Pension Plan

If you are a business owner, incorporated professional or executive concerned about the most effective way to save for retirement, you may want to consider an Individual Pension Plan. An Individual Pension Plan (IPP) is a defined benefit pension plan for the benefit of one or two individuals. There are significant advantages that Individual Pension Plans have over Registered Retirement Plans (RRSPs). 

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