How Much Is Enough? Understanding Your Retirement Income Needs Before Selling Your Business
If you’re a business owner even thinking about selling, you’ve likely asked yourself a version of this question:
“Will I have enough to walk away comfortably?”
It’s one of the most important—and most emotionally charged—questions in any exit planning journey. But the truth is, most owners don’t take the time to define what “enough” really means to them until they’re already deep in negotiations, or worse, post-sale and uncertain.
In this article, we’ll walk through how to begin estimating your Retirement Income Number—the amount of annual income you’ll need to maintain the life you want after stepping away from your business.
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Step 1: Envision Your Ideal Retirement Lifestyle
Before you calculate any numbers, you have to define the life those numbers are meant to support.
• Where will you live?
• How do you want to spend your time?
• Will you travel, pursue new ventures, invest in your passions?
This isn’t fluff. Your vision creates the blueprint for your future spending. Whether it’s a quiet life on the coast or a high-impact season of philanthropy and investment, your lifestyle goals will define your income requirements far more accurately than generic retirement benchmarks.
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Step 2: Estimate Your Monthly Income Needs
Once you have a vision, translate it into real numbers.
Start by listing monthly expenses: housing, healthcare, travel, dining, hobbies, etc. But don’t stop there—factor in personal expenses the business may currently be covering (like vehicle leases, insurance, or business-class flights to conferences that double as vacation).
Creating a clear budget—refined with the help of a CERTIFIED FINANCIAL PLANNER®—brings your retirement income number into sharper focus. It’s not about limiting dreams. It’s about funding them wisely.
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Step 3: Translate Income Into Asset Requirements (The 4% Rule)
Now comes the million—or multimillion—dollar question:
What size portfolio will you need to generate this income reliably?
Enter the 4% Rule, a basic framework suggesting that you can safely withdraw 4% of your retirement assets annually without running out over a typical retirement period.
Here’s a simple example:
If you need $500,000/year, divide by 0.04.
That puts your target portfolio at around $12.5 million.
But here’s the catch:
The 4% rule is just a guideline. Market volatility, inflation, legacy goals, and tax strategy all impact the real number. That’s why a detailed financial plan tailored to you matters far more than any internet calculator.
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Why This Matters Before You Sell
Knowing your Retirement Income Number gives your business sale a target. It helps you answer:
“How much do I actually need from this sale to live life on my terms?”
Without it, you risk underselling—or holding on longer than necessary out of uncertainty.
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Who You Work With Matters
Exit planning isn’t just about EBITDA and deal terms. It’s about transitioning from active owner to financially secure individual with a clear roadmap. A CFP® professional who is also a CEPA® (Certified Exit Planning Advisor) brings both lenses to the table—personal financial planning and business succession.
At Maven Group, we guide business owners through this process every day. Not because they’re ready to sell tomorrow—but because the best outcomes are built years in advance.
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Coming Up Next in the Series:
“Valuation Versus Reality: Setting a Strategic Price for Your Business”