Blogs & Comment

RRSPs and business owners

Many business owners think they can sell their business and live off the proceeds during their retirement years. However, this is a risky strategy because they have all their eggs in one basket. What if they cannot sell at the expected price or need to exit the business prematurely?
For this particular reason, the RRSP is a must-have investment for business owners, notes Evelyn Jacks in the 4th edition of her book, Make Sure its Deductible. Adds BMO SmartSteps for Business: Setting up an RRSP with conservative investments can help balance any volatility in your business returns and help secure your future long term.
BMO SmartSteps for Business mentions some other benefits to having an RRSP beside diversification. They include:
Bargaining power: With the strength of an RRSP behind you, youre in a better position to hold out until you find the right buyer for your business.
Protection: With the resource of an RRSP, you have protection if you need to exit your business due to unexpected circumstances – such as poor health – or at a time that is not ideal to sell.
Reliability: At any time, you can convert your RRSP to an annuity that will provide you with guaranteed income for life.