Even in the Family, True
Retirement Requires a Plan

Careers may be marathon runs -“ but they do have a beginning and an end. That is unless your career is serving as the head of a family business.

Then you get to have a self-defined slowdown phase called semi-retirement. It is a career-ending concept that only seems to fit in the family business environment. Those who have managed a family business for decades and managed to beat all the odds are business stars. So, perhaps we should take a look at how some other stars approach their career ends.

Don’t forget to plan for the rest of your life. This might be the time to do all those things you have put on hold.

Consider the career of the pro athlete. Once their prime is over, they too begin a slow down phase. Some become “bench warmers,” holding on to fill a niche position on a team (usually with a different team) like filling in for the rookie star, or pinch hitting for the veteran baseball player in a clutch situation. Some leave the active playing field for the front office or coaching.

A few do very well at their slowdown, some actually better at the second phase -“ like the average player who makes a great coach or manager. But most wind up like the boxer who had one too many fights-¦we all wish they would have left as champs instead of holding on for one more comeback.

Wall Street sends their executives packing with the Golden Parachute. While sometimes those may seem more like the jumbo jet coming in for a soft landing at the paradise of choice, at least they do have an end. Others move on to the next venture with their parachute in tow. Or, some get promoted to become the “Chairman of the Board.”

Clearly, semi-retirement lacks definition. Is it retirement, or work?

Overhearing a group of octogenarians at breakfast, I discovered three of the four were semi-retired. And while it was clear they no longer had job descriptions or regular responsibilities, “work” was spending some part of every day watching, or managing their retirement funds.

Then there is the successful 60-year-old family business owner who claims to be semi-retired while still reporting to the office daily (at least until lunch) the 40 weeks a year he is in town.

Sure, he spends most of the winter in Florida, but even there he manages his business through daily phone calls to children now in their 40s, but clearly not completely in charge.

The inconsistency drives the children crazy and they welcome the day they will have some real empowerment and control. They also wonder how the business will continue to fund their parent’s semi-retirement as they continue to slow down and play more, which costs money. They have noticed that as the parents spend more time in Florida and travel more (Mom’s passion), their compensation keeps going up to fund semi-retirement while their production and performance goes down.

With relatively young parents who insist on remaining in control while semi-retired, the children are thinking that it could be decades before a promise of “one day this will be yours” is kept.

While the family business owner has all the rights of ownership and profits, does the owner who is no longer working have the right to compensation?

If the intent is to pass the business along to the next generation while maintaining family harmony, a different course may be warranted.

At some point, the parental safety net needs to be something other than the business -“ like it would be for most retirees. Maybe we could define that as retirement -“ the point at which the parents take an ownership position only -“ like any other absentee owner. From that point on, they are funding their retirement from other sources.

This works best if a realistic schedule is agreed upon by all.

Recommended steps:

  1. Pick a real retirement date (turn in the key and move out of the office).
  2. Plan retirement funding (including what you need out of the business to become self sufficient).
  3. Establish a timeline for managing the transition.
  4. Empower your successors to take over as your role diminishes.
  5. Inform other key players of your plan -“ employees, clients, vendors and creditors.
  6. Stick to your plan, making only minor adjustments and only if truly necessary.
  7. Have a retirement party to mark the end of a successful career and turn the keys over to your successors.

While you are doing all this planning, don’t forget to plan for the rest of your life. This might be the time to do all those things you have put on hold, before it is too late.

By Richard M. Segal Richard Segal is the chair of the Family Business Council, a membership organization of family-owned businesses. He can be reached at [email protected].

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Richard Blanchard
Rick is the Managing Editor of Corp! magazine. He has worked in reporting and editing roles at the Port Huron Times Herald, Lansing State Journal and The Detroit News, where he was most recently assistant business editor. A native of Michigan, Richard also worked in Washington state as a reporter, photographer and editor at the Anacortes American. He received a bachelor of arts from the University of Michigan and a master’s in accountancy from the University of Phoenix.