What Is “Functional Retirement”?

A woman enjoying a hot drink by a fireplace - what is functional retirement?

By Ashley Haun and Brian Strump, Certified Two-Brain Fitness Business Mentors

It’s Sunday morning at 10:14 a.m. I’m sitting drinking coffee and planning my day. My staff has a meeting at 11 a.m. to discuss goals, clients, events and more. I will not be attending this meeting. I think we are going to eat breakfast, do a workout and then go for a bike ride. We will also be making the last payment on a vacation we planned to Mexico. 

This is functional retirement: the choice to work—or not—without sacrificing your income. It’s a fun and rewarding stage to be in. 

How did I get to this place? 

I came through the stages of entrepreneurship—Founder, Farmer and Tinker.

Take our quiz to find out what stage of entrepreneurship you’re in.

Although I reached the Tinker Phase, I continue to work for financial independence, and the final phase of entrepreneurship—the Thief Phase—looks like a beautiful stage to be in someday.

How did I develop a staff that allows me to choose when to work in the gym and go on vacation while the gym grows in my absence? 

Time and systems. I spent time developing my staff slowly and mentoring them in careers they love, and I created systems that ensure everything happens the way I want it to happen all the time—whether I’m at the gym or not.

If I had not been mentored to develop my business like this, I would not be sitting at home drinking coffee and dreaming of a trip to Mexico. 


More on Functional Retirement


Most new business owners start in the Founder Phase. Here, it’s common for the owner to work the majority of the hours to keep the business moving forward. The owner is wearing a number of hats, from CEO to cleaner. At this point, the business costs the owner money to run it. There is little to no profit.

The goal in Founder Phase is to break even as quickly as possible—to get your accounts “into the black.” 

After the business owner makes it through Founder Phase, Farmer Phase is next. It’s in this stage that entrepreneurs start to grow as business owners. They’ll begin to “ascend the value ladder” by hiring staff and delegating many of the repetitive tasks in the business. They might still find themselves doing a little bit of everything in the business, but they’ll also find the time to begin working on the business.

One of the main problems in this stage is the owner’s unwillingness to give up some control—but doing so is essential for the growth of the business. Most business owners stay in Farmer Phase forever and always act as owner/operators. 

The measurable goal of Farmer Phase is “functional retirement.” This is the halfway point between startup and wealth, and it comes just before the third phase of entrepreneurship: Tinker.

To achieve functional retirement, the owner must greatly decrease the hours spent working in the business and maximize the time spent working on the business. The business must pay 150 percent of the owner’s living expenses and grow and run without the owner’s constant oversight. The owner no longer cleans, answers phones or deals with many client needs on a daily basis.

Overall, the business is making money and offering freedom to the business owner: freedom of time and freedom of choice. The owner can choose to work or not work. Functional retirement means that your business is able to pay you whether you decide to work in the business or on something else.

At this point, your business becomes a true asset, and you can begin to view it almost as real estate for its ability to produce income with minimal work.

Functional retirement isn’t necessarily the “retirement” your parents had. You can relax on the swing and read in the yard or you can travel. Or you can work as you like to expand the business. Eventually, you might decide to use some of your income to start something new and begin your entrepreneurial journey all over again.

Functional retirement means you have options and get to choose exactly what you want to do.

Two-Brain Business offers mentorship in all phases of entrepreneurship and helps business owners move toward their goals quickly. To hear more about our roadmap to wealth and see if mentorship is right for you, book a free call.

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