Financial Planning with Your Business and Personal Wealth in Mind
By: Matt Wayt, Wealth Advisor, SVP at 1834, a division of Old National Bank
Balancing business and personal wealth can be challenging. Since your overall personal financial fortunes are closely connected to your business, it can be tempting to pour all your excess funds into your business. In many cases, however, that’s not the most prudent long-term choice.
Instead, you can strike a balance between your personal and business finances through careful planning and intentionality. Here’s how:
Retirement: Are You Building Toward the Personal Lifestyle You Want?
The earlier you start saving for retirement, the better. This is easy to hear and hard to put into practice; you may feel like a little more money put toward your business will tip it towards greater success.
We encourage you to think of the future of your personal finances in the same vein: A little extra up front toward your retirement could make a huge difference down the line.
Plus, by building your personal finances, you’re giving yourself long-term clarity of mind. With balanced resources, you have more options and a more level-headed decision-making process for yourself and your business—and you avoid the trap of panicked decision-making based on the belief that you have nothing but your business to rely on.
Lastly, there are many retirement accumulation accounts that provide tax advantages for business owners. We’re happy to talk through your options.
Liquidity and Risk
Once your business is past the initial startup phase, it’s time to consider more complex financial questions. Namely:
Are you diversifying your assets? As a business owner, you’re heavily invested in your sector, with its specific set of risk factors. Make sure your portfolio accounts for this.
What does your liquidity look like? Do you have enough funds easily available for your business’s working capital and your preferred personal lifestyle? Check regularly.
Do you have a recession plan? The pandemic clarified for a lot of businesses just how stark a change in fortunes can be. Better to develop strategies now.
What about unexpected exits? Typically, this means the unexpected death of a business partner. It’s preferable to plan for the legal ramifications now, rather than after a tragedy.
Life insurance for yourself. You want to protect your family’s lifestyle, while providing them with enough liquidity to cover any potential estate taxes.
Retiring with a Successful Business
Your overall mindset should become one of preservation. A few things to think about:
Shift your investment strategy. As you get older, you have less time to wait out market volatility. You may want to invest more conservatively and think of strategies that allow for a regular income.
Keep your business even keeled. Your business is already successful. You don’t want to overleverage yourself or take a major risk, just as you’re preparing to retire.
Consider how to withdraw retirement funds advantageously. You’ll need to navigate a variety of benchmarks and tax requirements. Some strategies include withdrawing extra retirement funds in a down year for your business, using your Roth savings strategically for major purchases and setting up qualified charitable contributions to lower your tax burden.
As retirement is in sight, it really pays to talk through your specific plans with your advisor. We’re happy to help you every step of the way, from reviewing your lifestyle needs, to planning where you’ll retire, to helping with your long-term care plan.
The Legacy of Your Business
We advise our clients to plan well in advance and work closely with skilled counsel. Some things to consider:
What is your succession plan? Most successful transitions are years in the making. Whether you’re turning your business over to your children, ceding your portion to a partner, or selling to a third party, have conversations with those involved as soon as possible, so you’re all working toward one goal.
Recent legislation permanently raised the estate tax exemption. The exemption is $15 million in tax year 2026, and will adjust for inflation in succeeding years. This creates new opportunities for strategic gifting and long-term estate planning.
Have you considered a trust? There are solutions that may make a transition smoother, more tax efficient, allow you to draw an annual income from your business for the rest of your life, or allow you to transition your business to a minor child.
What about your charitable legacy? How are you hoping to give back and what funds are you planning on using? This will inform when—and how much—you give.
The Goal Is to Pursue Your Desired Lifestyle
As a business owner, if you want to achieve your desired lifestyle, it makes little sense to plan your personal and business finances in isolation. At 1834, we want to know your hopes and dreams, so that we can help you develop financial strategies to pursue them.
Sponsored by 1834, a division of Old National Bank
Everyone’s situation is unique. If you have questions on how to balance your business and personal wealth, contact 1834, a division of Old National Bank at admin@1834.com.
1834, a division of Old National Bank is a boutique-style wealth management firm that caters to high-net-worth clients who have more complex or diverse financial needs.
The comments, views and opinions expressed herein are those of the author and 1834. From time-to-time, Old National Bancorp affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report. Old National Bancorp and its affiliates do not accept any liability for any direct, indirect, or consequential damages or losses arising from any use of this report or its contents.
Investment instruments utilized by 1834 are not insured by the FDIC nor any other government agency, are not deposits or other obligations of 1834, Old National Wealth Management, Old National Bank, its parent company, or affiliates, and involve investment risk including the possible loss of principal invested.
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