Small business owners aren’t prepared for retirement

Small business owners may be great at planning and running a company. But they lack a lot of foresight when it comes to their retirement.

According to a new study, 62% of small business owners have a financial plan for their retirement, while one-third have none. (5% are “unsure”, believe it or not). That’s according to the Discover Small Business Watch survey for December.  Also 63% said it is “somewhat or very likely” they will have enough saved to last through their retirement, while 32% responded it is “not very likely” or “not at all likely”.

So, a lot of small business owners aren’t saving for retirement adequately. And, of those who are, the recession has not been kind to their savings accounts.  Close to 75% said the recession has reduced their retirement savings.  Specifically, 60% saw a decrease in savings of 20% or more. (One-quarter had their savings drop 30% to 50%).

Of course, another way to look at it is, they’re doing better than the public at large. About 40% of Americans aren’t saving for retirement, according to a recent Charles Schwab survey.

One reason for this lack of adequate planning is probably that many small business owners think their companies will serve as their nest egg. Which is probably a correct assumption, if they can sell it at the right price. But, that is far from a shoe-in. I hear of many small business owners at the moment who have shelved plans to sell their firms because they know they’ll get a rock bottom price in today’s market.

Then, there are a fair number who figure they’ll keep on working past retirement age. Some 27%  of respondents in the survey said they plan to retire between 65 and 70 or after age 70.  Let’s hope they do. Because they won’t have much to live on otherwise.