Retaining profits in the business can make sense, both in terms of financing a growing business and as a tax-efficient way of building capital to fund your retirement.
However, this can be a high-risk strategy, particularly as you near your retirement age: problems with the business could destroy the capital on which you planned to retire. Where you plan to draw capital from the business to fund your retirement, you will also need to consider how the business will replace that capital.
Alternatives you should consider include making contributions to a pension fund. Suitable schemes can, if you wish, be used to support the business. For example, part of your pension fund might be used to acquire premises that the business can use.
