How Much Money Do You Need to Retire as a Business Owner?

Most owners can tell you roughly what their business might sell for. Far fewer can tell you the number that actually matters: how much they personally need, after taxes, fees, and debt, to fund the rest of their life without going back to work. Those are two different questions, and conflating them is one of the most common and most expensive mistakes owners make on the way to retirement.

A 2025 Raymond James survey found that 44% of business owners say the business represents more than half of their total net worth, and 9 in 10 say it’s at least a quarter. (Raymond James, “2025 Business Owner Report”) When most of what you own is locked inside one illiquid asset, your retirement plan and your business plan aren’t two separate projects. They’re the same project, whether you’ve treated them that way or not.

Table of Contents

• Separate What The Business Is Worth From What You Need
• What You Actually Keep After Taxes and Fees
• Build Your Number With a Safe Withdrawal Rate
• The Planning Gap Most Owners Are Sitting In
• Close the Gap Before You Set a Date

Separate What The Business Is Worth From What You Need

A business valuation answers one question: what would a buyer pay today, based on a multiple of earnings. A retirement number answers a completely different question: what does it cost, per year, to fund the life you actually want, for as long as you and a spouse might live.

Owners routinely skip the second question because the first one feels more concrete. A valuation is a single number from a professional. A retirement number requires you to be honest about your own spending, your health outlook, whether you’ll help kids or grandkids financially, and how long you expect to live. That’s uncomfortable work, so it gets deferred, sometimes until a buyer is already at the table and it’s too late to change course.

Do the retirement number first, or at least in parallel. If your retirement number comes out higher than what the business alone can realistically produce after taxes and fees, you need to know that 2 to 3 years before a sale, not 2 to 3 weeks before closing.

What You Actually Keep After Taxes and Fees

A $3 million sale price doesn’t mean $3 million lands in your account. Three categories of cost typically come out first:

• Deal costs. Broker or M&A advisor fees commonly run in the 8% to 12% range of the sale price on Main Street and lower-middle-market transactions, though the exact figure depends on deal size and who represents you.
• Debt payoff. Any outstanding business loans, equipment financing, or lines of credit typically get paid off from proceeds at closing before you see a dollar.
• Taxes. Long-term capital gains are federally taxed at 0%, 15%, or 20% depending on your income, and a 3.8% net investment income tax applies above certain income thresholds ($250,000 for joint filers). (IRS Topic 409) State-level tax adds another layer depending on where you live, and whether the deal is structured as an asset sale or a stock sale changes the math meaningfully.

Run the math backward from a headline sale price, and it’s common to see 20% to 35% of it disappear into fees, debt, and tax before it ever becomes retirement income. That’s not a reason to avoid selling. It’s a reason to model your actual after-tax proceeds early, with a CPA who works in transaction tax, not just annual compliance.

For a full walkthrough of structure and rate decisions, see tax implications of selling a business.

Build Your Number With a Safe Withdrawal Rate

Once you know roughly what you’ll keep after taxes and fees, you can test whether it’s actually enough. A widely used starting point is the safe withdrawal rate: the percentage of an invested portfolio you can draw each year with a high probability the money lasts through retirement.

Morningstar’s 2026 research puts that figure at roughly 3.9% in the first year, for a portfolio with 30% to 50% allocated to equities, giving a 90% chance the money lasts 30 years. That’s up slightly from 3.7% in 2025. (Morningstar, “What’s a Safe Retirement Withdrawal Rate for 2026?”)

Applied simply: if you need $150,000 a year to live on, after Social Security and any other income, a 3.9% withdrawal rate suggests you’d want roughly $3.85 million in invested assets to fund that safely. If your after-tax sale proceeds, plus existing retirement accounts and other investments, fall short of that number, you have three real options: work longer, spend less in retirement, or improve the business’s value before you sell so the after-tax number closes the gap.

None of those are wrong answers. What’s wrong is not doing the math and finding out the gap exists after you’ve already signed.

The Planning Gap Most Owners Are Sitting In

Most owners haven’t done this work, and the data backs that up. UBS Investor Watch surveyed owners who hadn’t yet sold and found that 37% have no estate plan, and 34% haven’t put any structure in place to minimize taxes or shield proceeds from an eventual sale. (UBS Investor Watch, July 2023)

That gap compounds. Without an estate plan, a sudden health event or death can force decisions under pressure instead of on your own timeline. Without tax structuring done in advance, an owner can lose the ability to use strategies (like installment sales, trusts, or entity restructuring) that only work if they’re in place before a deal is signed, not after.

Close the Gap Before You Set a Date

Building a real retirement number takes a short, specific list of steps, not a vague intention to “get with a planner eventually.”

1. Get an honest valuation. Not a guess, not what a competitor’s business sold for. A real, current estimate of what your business would fetch from a buyer today.
2. Model after-tax proceeds. Work with a CPA who handles transaction tax to estimate what actually lands in your account under a couple of realistic deal structures.
3. Calculate your retirement number. Add up your real annual spending, factor in Social Security and any other income, and apply a safe withdrawal rate to see what invested capital you need.
4. Compare the two. If after-tax proceeds plus existing savings clear your retirement number with room to spare, you’re in a strong position. If they don’t, you know exactly how much value the business needs to gain, or how much longer you need to work, before you set a date.
5. Put estate and tax structures in place now. Many of the tools that reduce what you lose to taxes only work if they’re set up before a sale is on the table.

A fee-only financial planner can help build the retirement-number side of this equation independent of anyone earning a commission on the sale itself. A transaction-tax CPA and a credentialed business appraiser handle the business side. Bringing all three into the same conversation, instead of treating valuation and personal financial planning as separate projects, is what turns a rough guess into a number you can actually retire on.

For the full picture of where this question fits among the others you need to answer, see 10 questions to ask before you retire as a business owner.

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The Owner’s Shortlist connects business owners with vetted specialists across valuation, taxes, legal and estate planning, financing, family transition, and team readiness. Visit The Owner’s Shortlist to compare relevant specialists and build a retirement number you can actually rely on.