Navigating the path to retirement can be complex. When you’re a veterinary practice owner, it can be even more challenging, particularly in a world increasingly dominated by corporate buyouts. You’re not just planning for personal retirement; you’re contemplating the future of a business you’ve poured heart and soul into. Here are a few tips to help get you started:
1. Begin Planning Early
The first step? Start early. If you’re looking to retire in the next 5-10 years, now is the time to start planning your exit strategy. By initiating the planning process 5-10 years before your anticipated retirement, you not only ease the transition but ensure the optimal value of your practice. A not so fun fact: A veterinary practice owner who passes away without a transition plan sees a devastating 40% decrease in the value of their practice.
2. Lean on Experts
Lean on professionals like the team at Southern Practice Consulting Group. Having guided over 250 veterinary practice owners towards a secure financial future, they have the expertise in creating a successful estate plan, mapping out financial retirement paths, and providing all essential information to make well-informed decisions.
3. Understand Social Security Benefits
Social Security is more than just a monthly check. It’s a cornerstone of retirement planning. Here’s why:
- Tax Implications: Unlike many retirement accounts, where withdrawals might be entirely taxable, Social Security benefits are only partially taxable – with a maximum of 85% being subject to tax.
- Timing is Everything: It might be tempting to start drawing Social Security as soon as you’re eligible. However, waiting just a few years can make a world of difference. While 40% of Americans claim Social Security at age 63.2, delaying your benefits until age 70, you can lead to a substantial increase in the amount you can draw (to a tune of $250,000+). What many people don’t know, for every year you wait beyond your full retirement age (62), you receive an 8% guaranteed growth in your Social Security benefit.
- Spousal Benefits Matter: If you’re married, the benefits you or your spouse receive could significantly affect the other. In cases where one spouse passes away, the survivor can opt for the higher of the two benefit amounts. This means if you delay your retirement, your spouse could draw an additional couple hundred dollars each month in the event of your death.
4. Strategic Exit Planning
If you’re a practice owner, strategically planning your exit, whether through a buy-in, earn-in, or complete sale to a private equity firm, is crucial. Business valuation, clean financial records, and attracting associate vets are key components.
- Business Valuation: Know the worth of your practice. Clean, accurate financial records make your practice more appealing to potential buyers or partners.
- Attracting Associate Vets: To attract associate vets, consider offering ownership stakes over time. This can motivate them to help grow the practice, benefiting both parties in the present and in the future.
5. Think Outside The Box
Leveraging Social Security benefits can mean more funds available for your estate plan. Combine this with strategic exit planning, and you’re on the path to ensuring your practice continues to thrive even after you’ve retired.
6. Never Too Early to Start
“Is it too soon to begin an estate plan to leverage your Social Security benefits?” The answer is always, “No!” Your decisions today will shape your financial legacy and the future of your veterinary practice.
Retirement planning goes beyond personal savings; it’s about securing your financial legacy and ensuring a smooth transition for your veterinary practice. Join us for a deep dive into Leveraging Your Social Security at the VetSouth Conference for our session at 8 AM on Sunday, October 2, 2023 and arm yourself with the knowledge you need to ensure you live your golden years in style.
Prepare now. Think creatively. And secure your future.