44 and Burnt Out !!

[Eddie1914]

Hello ,

First I would like to say I don't know jack about Stocks , Bonds or Funds.
My wife and I and a partner started a business in 1995 (My wife and I own 66.6 % ) the company has retained earnings of 4.5 million dollars. I have no Mortgage on my home , value at 750k , so I am pretty much debt free other than 2 cars and 2 kids to put thru college , ages 14 and 16.So here is my question , can I pull the zip cord what can or should I do ? Any help will be welcomed ,

I should have mentioned , thats is all the money we have , no savings , no retirement accounts , nada , we just left everything in our company.

Thanks again

 

[LARS]

I assume to "unlock" your 66% of retained earnings you would have to sell the business? Is the business saleable without you? Does your partner want to sell? Is he a buyer?

Many times small businesses are hard to sell and the best you can realize is a hard net asset value. Worst case is you liquidate the business. Without specifics of your business it is impossible to know what your outcome might be. I would also imagine given the current state of the economy any buyer is going to look for a very attractive price (ie this may not be the best time to realize maximum value).

Until you get your arms around those issues it is very hard to give advice.

You should take my questions/advice with a grain of salt recognizing in my previous life I was a Managing Director in Mergers and Acquisitions for a bulge bracket Wall Street Investment Bank.

 

[walkinwood]

Try using firecalc - see the link at the bottom of this page.

There are some great books listed in the FAQ section of the forum.

Early Retirement FAQs - Early Retirement & Financial Independence Community

I suggest that you educate yourself so that you can manage your own investments. It is not rocket science and you'll pay dearly for a financial advisor. Even if you choose to go that route, the education will help.

Two of my favorites are The Four Pillars of Investment by William Bernstein and Work Less Live More by Bob Cylatt.

Welcome to the forum. All the best.

 

[cardude]

Wow. That's a lot of retained earnings to keep in the company IMO. I always paid out almost all earnings out each year when I was in business (as long as the business didn't need them) because I didn't want to be over capitalized, and because was scared of getting sued and losing it all. Why did yall leave so much RE in the company over the years?

Instead of selling the business could you just do a special dividend and distribute the earnings? Since you retained all those earnings I'm assuming it's a Sub S Corp so the earnings would be taxed at your personal tax rate, but tax rates are only going to go up in the future IMO so it still may be a good idea. If you own 66% of those REs then that would give you maybe 1.9-2M after tax and after your 66% split. Could you retire on that? Or semi-retire on that and run the business part time maybe?

What's the business worth if you sell it?

 

[photoguy]

Hello ,

First I would like to say I don't know jack about Stocks , Bonds or Funds.

Can't advise on your business, but here is a good place to get started:

Getting Started - Bogleheads

 

[Milton]

what can or should I do?

What do you want to do? You need to provide more information about your current situation and the sort of changes you're looking for.

So here is my question, can I pull the zip cord

To have any idea about whether you have enough saved up to allow you to stop working, you'll need to have a reasonably reliable handle on your projected expenses in retirement. How much do you currently spend, and how do you expect that to change in the future?

I assume to "unlock" your 66% of retained earnings you would have to sell the business?

Not necessarily.

Does your partner want to sell? Is he a buyer?

Since the op and his wife jointly enjoy a majority interest, the partner's desires may well not be terribly important. In any case, presumably the shareholders' agreement contains a shotgun clause?