Private Retirement Provision for Entrepreneurs: Strategies for Security Beyond the Sale of the Business

Many entrepreneurs primarily rely on the proceeds from the sale of their business for retirement planning. However, this strategy carries significant risks: market fluctuations, valuation uncertainties, or the absence of successors can jeopardize the planned retirement. This guide shows how you, as an entrepreneur, can build a diversified retirement provision that does not depend solely on the sale of your company.

The Business Sale Trap: Why Additional Retirement Provision Is Essential

Focusing exclusively on the sale of the business as retirement provision is problematic for several reasons:

• Valuation Uncertainty: The actual sale price achieved can differ significantly from your expectations
• Timing Risk: Economic fluctuations or industry crises can substantially reduce the value at the time of sale
• Demographic Challenges: The "succession gap" with fewer potential buyers will intensify in the coming years
• Dependence on Business Success: Illness or other unforeseen events can abruptly reduce the company’s value

Alarming Statistic: According to a KfW study, 40% of entrepreneurs willing to sell find no suitable successor or achieve a significantly lower sale price than planned – with serious consequences for retirement security.

The Three-Pillar Strategy for Entrepreneurial Retirement Provision

As an entrepreneur, you should build your retirement provision on three pillars:

Pillar 1: Occupational and Statutory Protection

• Voluntary statutory pension insurance: Option for self-employed individuals to contribute to the statutory pension system
• Rürup pension (basic pension): Tax-advantaged retirement provision specifically for the self-employed
• Occupational pension schemes: Also available for shareholder-managing directors

Pillar 2: Private Asset Building Outside the Business

• Capital investments: ETFs, stocks, bonds
• Real estate investments: Direct investments or participations
• Private pension insurance: Traditional or unit-linked

Pillar 3: Business Value and Sale

• Strategic business value enhancement
• Structured succession planning
• Alternative models for business succession

Planning Recommendation: Aim for a distribution where a maximum of 40-50% of your retirement provision is based on the expected proceeds from the business sale. The remaining 50-60% should be secured through the other two pillars.

Statutory and Subsidized Retirement Strategies for Entrepreneurs

Voluntary Insurance in the Statutory Pension Scheme

As a self-employed person, you can voluntarily contribute to the statutory pension insurance:

• Contribution amount: Flexible between minimum and maximum contribution (2025: approx. €96 to €1,390 monthly)
• Advantages: Disability protection, rehabilitation benefits, predictable pension
• Disadvantages: Comparatively low returns, no capital payout possible

Tip: Especially beneficial for younger entrepreneurs who want to build a solid foundation.

Rürup Pension (Basic Pension)

The Rürup pension was specifically developed for self-employed and freelance professionals:

• Tax incentives: Contributions in 2025 are 96% deductible as special expenses (deductibility increases annually)
• Maximum subsidy amount: €25,639 (single) or €51,278 (married) per year (2025)
• Payout: Lifetime pension model, no capital payout possible
• Insolvency protection: Accumulated capital is protected from seizure

Tax Advantage: With a top tax rate, the Rürup pension can generate significant tax savings, which you can reinvest in additional retirement components.

Occupational Pension Schemes for Shareholder-Managing Directors

Even as a shareholder-managing director of a GmbH, you can utilize occupational pension instruments:

• Pension commitment: Direct company promise with pension provisions
• Support fund: External administration of occupational pension schemes
• Direct insurance: Life insurance taken out by the company

Tax Note: Pay attention to the appropriateness of the overall benefits to avoid hidden profit distributions. Be sure to consult a tax advisor with expertise in tax aspects of business succession.

Private Asset Building: Your Second Pillar

Stocks and ETFs: Long-Term Wealth Accumulation with Return Opportunities

Securities investments offer entrepreneurs attractive opportunities for long-term wealth building:

• ETF savings plans: Cost-effective, broadly diversified investments
• Dividend strategies: Focus on high-yield companies for passive income
• Thematic investments: Complementary investments in future-oriented topics

Sample Calculation for ETF Savings Plan:

Monthly Savings Rate	Investment Horizon	Assumed Annual Return	Final Capital
€1,000	20 years	6%	approx. €464,000
€2,000	20 years	6%	approx. €928,000
€3,000	20 years	6%	approx. €1,392,000

Return Note: The assumed return is based on historical averages of global stock indices. Actual results may vary.

Real Estate as Retirement Provision for Entrepreneurs

Real estate offers entrepreneurs several attractive retirement options:

• Direct investments: Rented residential or commercial properties
• Company property: Owner-occupied in the business, later rented or sold
• Real estate funds or REITs: Indirect participation for lower administrative effort

Special Features of Company-Owned Real Estate:

• Sale-and-lease-back: Sale of company property with simultaneous leaseback
• Removal from business assets: Transfer to private assets before the business sale
• Rental to successor: Additional retirement income after business transfer

Real Estate Tip: Examine tax structuring options early, ideally 5-10 years before the planned business sale.

Private Pensions and Life Insurance: Predictable Supplementary Pension

Insurance-based solutions offer calculable payouts:

• Unit-linked pension insurance: Combination of capital market opportunities and insurance protection
• Index policies: Participation in stock market gains with minimum guarantees
• Traditional pension insurance: Guaranteed benefits but lower return expectations
• Immediate annuities: Single premium with immediate pension payments

Design Tip: Use the flexibility of modern contracts with partial payout options and adjustable contributions to respond to liquidity fluctuations in the business.

Protection Through Business Structuring: The Third Pillar

Strategic Business Value Enhancement for the Sale

Increase the sale value of your business deliberately:

• Reduction of dependencies: Diversify customers, suppliers, and key employees
• Process documentation: Establish transparent, person-independent workflows
• Digitalization strategy: Digital transformation as a value driver
• Building scalable business models: Strengthen recurring revenues

Valuation Tip: Have a professional business valuation conducted 5-7 years before the planned sale to identify optimization potential.

Alternative Succession Models with Ongoing Income

Besides the classic full sale, other options are available:

• Partial sale with management mandate: Sale of majority shares while continuing in management
• Gradual handover: Hybrid models with partial handover
• Leasing: Leasing the business instead of selling
• Employee participation: Gradual transfer to employees

Example Partial Sale with Management Mandate:

Model	Advantages	Disadvantages
Sale of 70% of shares	- Immediate partial capitalization - Risk reduction - Shared responsibility	- Coordination required with new majority owner - Reduced decision-making freedom
Sale of 49% of shares	- Control remains with entrepreneur - Partial capitalization - Attractive for strategic investors	- Lower sale proceeds - Continued main responsibility - Limited exit options for minority shareholders

Model Recommendation: Especially for entrepreneurs over 55, a staged exit with gradual sale can be attractive to free up capital while continuing to participate in business success.

Innovative Retirement Models for Entrepreneurs

Modern concepts enable smooth transitions:

• Active Ownership: Transition from operational business to advisory role
• Portfolio Entrepreneur: Reduction of main engagement, parallel smaller participations
• Advisory board activities: Contributing expertise to other companies

Tax-Optimized Retirement Strategies for Entrepreneurs

Optimization of Legal Form for Retirement Provision

The company’s legal form significantly influences your retirement options:

• Sole proprietorship: Special importance of tax exemptions under §16 EStG upon sale
• GmbH: Possibilities for pension commitments and distribution strategies
• GmbH & Co. KG: Flexible combination of corporate and partnership advantages

Legal Form Tip: About 10 years before planned retirement, check whether a legal form change could offer tax benefits for your retirement provision.

Holding Structures for Entrepreneurs

Holding models offer special advantages for wealthy entrepreneurs:

• Asset holding: Separation of operating business and private assets
• Holding structures before sale: Optimization of capital gains taxation
• Family holding: Integration of succession planning into asset structuring

Planning Horizon: Holding structures should be established at least 7 years before the planned business sale to gain tax recognition.

International Tax Planning for Entrepreneurs

For larger assets, international structures can be useful:

• Utilizing double taxation agreements: Optimization for international activities
• Foreign holdings: Structuring through countries with favorable tax treaties
• Residence relocation: Option for entrepreneurs before the sale

Compliance Note: International structures must always comply with applicable tax laws and transparency requirements.

Industry-Specific Retirement Strategies

Liberal Professions and Knowledge-Intensive Services

For owners of consulting firms, law firms, or engineering offices:

• Gradual handover: Stepwise sale to younger partners
• Sale of mandates/clients: Monetizable even without a successor
• Of-counsel models: Retain selected mandates in retirement
• Professional pension schemes: Use of professional pension funds

Crafts and Manufacturing Industry

For owners of craft businesses or manufacturing companies:

• Separation of business and real estate: Renting out business property after sale
• Management buy-out: Long-term prepared handover to employees
• Machine leasing: Sale and leaseback of fixed assets

E-Commerce and IT Companies

For owners of e-commerce companies or IT service providers:

• Earn-out models: Sale price linked to future performance
• SaaS transformation: Shift to recurring revenues
• License models: Development of products with passive income potential

Psychological Aspects of Entrepreneurial Retirement Provision

From Entrepreneur to Investor: The Mental Transformation

The transition from active entrepreneur to asset manager is also a psychological challenge:

• Identity change: Finding a new role as investor instead of decision-maker
• Giving up control: Learning to delegate asset management partially
• Risk perception: Adjusting risk attitude to retirement phase

Mental Preparation: Start building an investor identity 3-5 years before planned business exit, e.g., through parallel investment activities.

Work-Optional Lifestyle: Flexible Transition into Retirement

Modern retirement concepts for entrepreneurs:

• Partial retirement: Reduction of workload instead of complete exit
• Project-based work: Selective engagement based on interest
• Mentor role: Passing on knowledge to younger entrepreneurs
• Emotional preparation of the owner: Consider psychological aspects

Lifestyle Tip: Experiment with longer breaks years before official retirement to find your ideal work-life balance.

The 5 Most Common Mistakes in Entrepreneurial Retirement Provision

1. Too Late Diversification of Assets

Problem: Entrepreneurs often invest every free euro back into their own business until the very end.

Solution:

• One-third rule: From age 45, invest at least one-third of all profits outside the business
• Systematic wealth building: Continue monthly savings plans regardless of business development
• Withdrawal discipline: Clear rules for private withdrawals and their reinvestment

2. Overestimation of Business Value

Problem: Entrepreneurs often significantly overestimate the achievable sale price.

Solution:

• Regular external valuations: Conduct an objective business valuation every 3-5 years
• Realistic multiples: Apply industry-standard valuation methods
• Worst-case planning: Base retirement provision on a conservative sales scenario

3. Insufficient Disability Coverage

Problem: Many entrepreneurs neglect protection of their earning capacity.

Solution:

• Tailored disability insurance: Policies specifically designed for self-employed
• Dread disease insurance: Coverage against serious illnesses
• Shareholder agreements: Provisions for illness cases among partners

4. Neglecting Liquidity Planning

Problem: Illiquid assets can cause problems in retirement.

Solution:

• Liquidity tiers: Divide assets into short-, medium-, and long-term accessible classes
• Withdrawal strategy: Plan which assets to use in what order for living expenses
• Credit lines: Pre-arranged credit facilities for liquidity shortages

5. Lack of Coordination Between Succession and Retirement Planning

Problem: Succession and retirement planning are often treated separately.

Solution:

• Integrated planning: Coordinate succession, retirement, and inheritance planning
• Family constitution: Clear regulation of benefit claims in family businesses
• Emergency plans: Arrangements for unexpected entrepreneur incapacity

Practical Tip: Your Personal Retirement Strategy in 5 Steps

Step 1: Current Situation Analysis of Your Retirement Provision

• Asset balance: Listing all assets and liabilities
• Gap analysis: Calculating capital needs for retirement
• Risk analysis: Identifying concentration risks and dependencies

Step 2: Define Your Retirement Goals

• Lifestyle definition: Concrete idea of desired lifestyle
• Timing: Setting the target retirement start date
• Flexibility requirements: Determining desired degrees of financial freedom

Step 3: Develop a Diversified Retirement Architecture

• Asset allocation: Distribution of assets across different classes
• Tax optimization: Incorporate tax aspects into the structure
• Liquidity planning: Ensure sufficient availability

Step 4: Consistent Implementation with Professional Support

• Expert team: Assemble tax advisor, financial planner, and possibly M&A consultant
• Automation: Establish automatic saving and investment processes
• Documentation: Structured recording of all retirement components

Step 5: Regular Review and Adjustment

• Annual review: Check retirement strategy
• Adaptation to life events: Flexibly respond to changes
• Retirement simulation: Trial run of retirement for 2-3 months before final exit

Conclusion: Secure Entrepreneurial Retirement with Diversified Provision

Retirement provision as an entrepreneur requires a significantly more active and diversified approach than for employees. Building multiple independent retirement pillars alongside the planned business sale is not only sensible but indispensable given the uncertainties of the market.

The earlier you start systematic retirement planning, the better you can leverage various tax structuring options and benefit from long-term compound interest effects. It is especially important not to view retirement provision in isolation but as an integral part of your overall business strategy and succession planning.

With a balanced mix of statutory and private provision, strategic wealth building outside the business, and well-considered succession planning, you create a robust financial foundation for your retirement—regardless of the final sale price your company achieves.

Final Tip: Invest in professional, holistic financial planning that takes your entrepreneurial situation into account. The costs are negligible compared to the potential benefits of optimized retirement planning.

For an initial assessment of your company’s value as part of your retirement planning, you can use our business valuation calculator.