Innfo: Operating A Successful B&B
A Guide For The Serious B&B Innkeeper
Retirement Planning for
the Bed and Breakfast Innkeeper
January 1, 2006
by Kit Cassingham
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Retirement planning is an important step for bed and breakfast innkeepers to take to preserve the
assets they have put into buying or creating their B&B, as well as the value that is growing as the
business grows. Whether you think of this as retirement income planning or financial retirement
planning, it's important and should probably be handled by a professional in the retirement
planning services business. You can use retirement planning tools found online as you consider your
retirement planning investment, but a professional has a bigger picture and can guide you through
the maze of options and considerations. As long as you are planning for retirement, you are
planning for success.
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Retirement planning is a multi-pronged activity. You want to incorporate retirement income planning with:
health insurance
long-term care insurance wills
trusts
various POAs (power of attorney)
Health insurance is important to take care of the issues that
arise any time, any where, but especially as we get older. And if you find yourself in a situation where
you can't work because of an illness, then disability insurance will kick in and pay somewhere between
45-60% of your gross income. Long-term care insurance handles the time when you have a degenerative
condition (like a stroke or Parkinson's), a prolonged illness (cancer or a coma), or a cognitive disorder
(Alzheimer's). Another way to think of long-term care is as "nursing home insurance".
Wills spell out how you want your possessions dispersed after
your death, and if you throw your living will into the formula, you clearly state what's to happen to you
and your estate in the event of a permanent disability or terminal illness. And trusts put your real estate
and other belongings into a plan that ensure your heirs receive your property according to your wishes.
A Power of Attorney (POA) is a legal instrument that delegates
legal authority to another. There are different POAs, including durable, nondurable, and springing. A
durable POA enables the selected person to act for the Principal in the event the Principal is mentally or
physically incompetent to handle their own affairs. It's effective until either revoked by the Principal or
the Principal's death. A nondurable POA is often used for specific transactions, like a real estate
transaction. A springing POA becomes effective at a future time, like for an illness or disability; it's in
effect until either the Principal's death or until revoked by a court.
Retirement planning is important because retirement is going to
cost you more than you probably are estimating. Your living costs don't go down when you retire, they go
up, partially because of increasing medical costs. Health care isn't cheap, and as people age their health
problems tend to increase. That's a double whammy that you need to plan on.
Retirement planning mistakes to avoid include:
not checking out your financial advisor or broker before hiring them
withdrawing money from your retirement plan which causes loss of interest and possible early withdrawal penalties
relying on Social Security as your retirement income
not monitoring your investments
not reviewing your plan regularly
putting all your eggs in one basket, or poor asset allocation
not taking retirement planning seriously, or doing it at all
Retirement planning investment options (or savings) include:
savings accounts and CDs
Roth and Simple IRAs
410(k)
annuities
modified endowment contracts
Planning for retirement may mean hiring a professional who
specializes in retirement planning services, or you may want to buy retirement planning tools and manage it
yourself. Just be sure to do something, anything, toward saving money for retirement.
Retirement planning starts today. Don't wait until you are
retired to implement a smart plan, because it's probably too late then. Life happens, and you should be at
least one step ahead of the game. Make sure you have not only your retirement income planning taken care
of, but also health and estate planning issues nailed down.
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