Yes, a private company can pay dividends. Or you could loan it the money to buy out your shares and collect interest as it pays back the loan. Or a mixture of the two, with a thousand little variations on terms. I believe I ran into an employee-owned company once that had gone through some version of the loan scenario.

Possible, yes, and frequently used I’m sure, but entangles the retirees financial future with the business’s future — the retiree loses if the new owners make bad decisions, overleverage, and end up defaulting / bankrupting themselves. I don’t think it’s reasonable to force all businesspeople to retain this risk after disposing of the business concern.