My retirement plan is based on my assets generating enough income for me to live off without having to spend any principal. To do this, I need to save up a good amount of assets plus earn a good amount of income on them. These two are inversely related -- the more assets I have, the less I have to earn on them. Likewise, the fewer assets I have, the more I have to earn on them to make ends meet.
Since I am financially conservative by nature, I want to do both -- have a good amount of assets and have them earn a decent return. So I've been saving/investing like crazy for 20 years to amass a good amount of assets. And lately I've been working on options like rental real estate and dividend investing to earn me a good post-retirement return. I'm also planning on a few other options to generate extra retirement income.
Well, here's an idea to add to the list: use your accumulated assets to buy a business that churns off income.
The pros are that you'd likely be able to earn 6% to 10% off your investment (more if it was leveraged) and thus would need fewer assets to retire. You'd also have something of value so if you got tired of it you could sell and get your money back.
On the other hand, buying a business seems a lot less like retirement and a lot more like work. Yes, you could find a manager to run your business but you'd likely still need to be involved or risk losing a good chunk of your investment if the manager didn't pan out.
Anyway, I thought the idea might have some merit so I wanted to open it up for discussion. What do you think?