When it comes to retirement planning, what are small-business owners waiting for? Though they are responsible for funding their own retirement, a new survey of small-business owners conducted by the American College finds that a third of small-business owners do not have a personal or business-sponsored retirement plan. Further, a third of women and a quarter of men have not estimated how much they will need when they retire.
Mary Quist-Newins, director of the State Farm Center for Women and Financial Services at the American College, called the findings “stunning.” “Small-business owners have no one else to rely on,” she said in a statement.
While two-thirds of women and 70 percent of men have estimated their retirement needs, only half have consulted with a financial advisor, the study found. A quarter of respondents used online calculators while the remainder worked old school using pencil and paper. Seventy-seven percent of women and 74 percent of men small business-owners said they had no written plan for retirement.
It’s not procrastination, they say. For almost half, it’s cost of living issues and focusing on staying in business that preclude them from saving for retirement. In a February survey conducted by Millionaire Corner, more small business owners said that inflation and/or living expenses, more than having adequate retirement savings, were their most significant financial concern at this time.
According the to the American College survey, primary concerns among small-business owners include higher health care costs (42 percent women, 38 percent men), cost of living increases (40 percent), and maintaining their present standard of living (37 percent women, 35 percent men).
Other potential roadblocks to successful retirement planning include a tendency expressed by 37 percent of the women and 38 percent of the men to think that their retirement planning needs will be complex, failing to take in to account financial planning scenarios that encompass inflation, medical expenses, longevity, asset and tax management, long-term care, and distribution of income.
Many small-business owners make the same mistake as homeowners who believed that their residence would be their primary source of retirement income, an expectation shattered by the recession and the collapse of the housing market. These owners solely plan on business revenue or proceeds from selling the firm to sustain them in retirement. If the business fails, there is no safety net.
Then there are small-business owners who for a variety of reasons are not even considering retirement. Many “love what they are doing and don’t see the point of retiring,” Patricia Greene, the Paul T. Babson Chair in Entrepreneurial Studies at Babson College told USA Today. “It’s hard for many of them to think what life would be like with without (running) the business.”
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.