As the average life span increases, entrepreneurs are able to run their businesses for an even longer period of time. However, this shift can make deciding when—and whether—to leave considerably harder.
In a recent survey conducted by Bank of America, 92 percent of wealthy Americans said longevity was an important factor in their financial planning. And among business owners, 78% called succession planning critical to their wealth strategy. Yet, only 20% had a fully documented plan.
To compile this data, Bank of America surveyed 1,431 U.S. adults with at least $3 million in investable assets, excluding their primary residences.
The survey also found that more companies are moving between generations. Twenty-three percent of wealthy business owners said they inherited their companies, up from 11% in 2024 and 5% in 2022. Family involvement in business decisions rose to 27%, up from 7% in 2024.
Together, the findings point to a more complicated kind of founder exit—one that can stretch over decades of overlapping ownership, management, and family interests.
How longevity is playing a role in financial planning
“Longer lifespans are contributing to more gradual ownership and management transitions,” Javier Romero, head of the Business Owner Planning Center of Excellence at Bank of America Private Bank, told Inc.
Some owners are building management teams that can operate without them, Romero said. Others are pursuing partial sales, bringing in strategic or silent partners, or using employee stock ownership plans to take money out of the business while retaining equity and potential upside.
“Business owners should stop thinking about succession as a single event and start treating it as a decades-long transition,” Joseph Coughlin, director of the MIT AgeLab, a research center focused on longevity, told Inc.
The question is no longer simply who takes over, he said, but what role, purpose, and influence the founder wants to retain over another 20 or 30 years.
That longer horizon affects when owners sell, how much wealth they move out of the company, and when they surrender control.
“The most common mistake is failing to distinguish between business wealth and retirement wealth,” Olivia S. Mitchell, a professor at the Wharton School and executive director of its Pension Research Council, told Inc.
Owners may assume their companies can always be sold at an attractive valuation or continue producing income indefinitely. But a downturn, industry disruption, health problem, or succession dispute could reduce the business’s value just when its founder needs cash.
Mitchell said owners do not necessarily need to sell outright. Creating partial liquidity can cover spending, health care, and unexpected costs without forcing them to sell. Otherwise, retirement security may remain dependent on “one asset, one industry, and one management team.”
Money is only part of the problem. Coughlin said owners often derive their identities, as well as their incomes, from their businesses. As a result, longer lives can extend the period in which a successor manages the company while the founder retains voting rights or continues directing strategy.
Founders also should not assume that a child or colleague wants the company—or believes its business model can survive another 25 years.
The absence of a clear successor is also one reason owners fail to formalize their plans, Romero said. Many remain focused on running the company and view succession as abstract or premature, particularly when no event has forced the issue. The result is a perception that it is still “too soon.”
Longevity planning must also account for the possibility that a founder remains alive but can no longer make complex decisions. Only 46% of respondents had all three documents Bank of America identified as essential: a will, a living will or advance directive, and a durable power of attorney.
—Georgia Fearn
This article originally appeared on Fast Company’s sister website, Inc.com.
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