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Small Business Owners: Are You Adequately Preparing For Retirement?


As a business owner, you’re probably used to having a lot on your plate – budgeting, drafting business plans, hiring employees…and setting up your own retirement plan.

 The Guardian Life Insurance Company of America conducted a national study of small business owners (SBOs) to gauge their views on retirement. 

Below are their key considerations:

  • What are SBOs’ behaviors and attitudes about retirement?
  • Are SBOs preparing for retirement?
  • Are there gender differences in how small business owners prepare for retirement?

Attitudes about retirement: Can you count on selling your business to fund retirement?

The 2014 data shows that overall, small businesses are growing and owners are optimistic about their retirement plans. The majority of respondents are so committed to their work that they can’t even see themselves retiring completely.

SBOs believe they can retire earlier than their peers and plan to sell their business to be financially ready for retirement. If you plan to follow suit, start thinking early about how to create a business that can operate without you. Try to identify appropriate buyers so you can grow your company in a way that’s attractive to potential acquirers. 

According to Modera Wealth Management, many SBOs overvalue their businesses. Factors like industry dynamics, creating a business that can’t function without the owner, an older client base, slow growth, and having only a few large clients may lead to a lower than expected sale price.

In fact, 59% of entrepreneurs believe they’ll accrue most of their retirement savings through current earnings by putting a little bit of money away every month. But only 33% of SBOs have individual retirement accounts. And 40% of entrepreneurs don’t save at all.

As you can see, attitudes don’t always align with behaviors when it comes to retirement planning. Entrepreneurs plan to sell their companies to fund retirement, but most don’t get the high sale price they had hoped for. SBOs want to create savings accounts for retirement, but fail to set them up or never save. For those who don’t plan to sell their businesses, 2/3 have a succession plan for how they’ll pass off the company and retire. However, many of these succession plans lack a formal retirement plan that can help ensure that they achieve their retirement savings goals. 

Retirement preparedness: Should you use a financial advisor or go it alone? 

Half of small business owners say they are very well or fairly well prepared for retirement. Most SBOs have set aside money or invested in real estate to fund their retirement. They also expect Social Security to supplement their retirement savings. 

35% of SBOs chose not to use a financial advisor and are planning for retirement on their own. Through the survey, this group requested information about next steps and their options, knowledge on how to budget for their retirement, create a plan, understand tax implications, and increase their savings. While this isn’t an exhaustive list of options, financial advisors can help you open a 401(k) and/or a SEP IRA so that you can start saving for retirement.

A financial advisor can make SBOs feel more secure about their ability to retire and pay their bills. Most respondents found their financial advisors through a mutual acquaintance. Some SBOs also draw on the expertise of an accountant or CPA to get additional financial advice.

Bigger businesses are more likely to have a detailed financial plan, including facets like investments for retirement income, investment strategies, retirement income goals, and a strategy for not outliving the money they plan to have for retirement. 

Are there gender differences in retirement preparedness?

Women are nearly twice as likely as men to become an unexpected business owner, and strive more for financial stability in retirement. They’re looking for a financial advisor who is trustworthy, knowledgeable, experienced, a good listener, and has integrity.

All SBOs – men, women, large companies and small – can benefit from creating a formal retirement plan. Financial advisors can help in the process, but it’s most important that you find the best fit for you and your business. 

How are you planning for retirement? Leave a comment below or tweet us @KabbageInc!


Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at