By Douglas Dubitsky
Where do you stack up among other small business owners (SBOs) for retirement? According to research recently conducted by The Guardian Life Insurance Company of America, roughly 52 percent of small business owners are very well or fairly well prepared to retire, and most plan to do so at 65. Many have plans to alternate work and retirement, and all have plans to keep busy through a combination of full, part-time and volunteer work.
When thinking about what retirement will look like, certain themes were popular among SBOs. The majority, understandably, are hopeful they will have enough money for retirement, and many note they want to have an abundance of fun. Still other future retirees’ dream of having more free time available, whether it was to help others or to spend with family and friends or just doing whatever they want. Some SBOs hope to be able to spend time helping people through volunteering or other avenues and some dream of travel. Some note that they never plan to retire, saying when they retire they will “be dead.”
In preparation for retirement, most small business owners either set aside money and have retirement savings or invest in real estate. Financial professionals have become among the best allies to an SBO for retirement planning, being relied upon for the development of a comprehensive, holistic plan that addresses the SBOs goals and needs – and takes care of the people in their lives who are important to them. Clearly, those who are best prepared for retirement are those who planned ahead, sought advice, and followed through with actions.
Overall, actions SBOs have taken to prepare for a financially successful retirement include:
- Setting aside money into saving or investment (77 percent)
- Investment in real estate (54 percent)
- Speaking with financial advisor (48 percent)
- Reading books or articles about retirement (47 percent)
- Setting aside money into company retirement plan (45 percent)
- Setting aside money in whole/permanent life insurance plan (39 percent)
Interestingly, there are some differences in the way SBOs are approaching retirement based on age, gender, and size of the small business. Only 14 percent of women report that they feel “very well prepared” for retirement. They seem to want the extra “push” they can get from their financial advisors, with 33 percent of women looking for that extra momentum versus 27 percent of all of those polled. Most often, male small business owners want an advisor who is creative and who takes calculated risks. In fact, 28 percent of the men polled are looking for financial risk, compared to 21 percent of women.
In comparison, more than any other age group, Millennials aged 25-34 did not expect to own a business. In addition, a significantly higher proportion of those respondents also state that a period of unemployment has impacted their ability to save for retirement. They are more likely than older respondents to consider an advisor important and those who can “provide big company solutions with a small company touch” and “meet with employees to educate them.”
Indeed, the pathway to retirement and the retirement planning process is as varied as small business owners themselves. One thing that was almost unanimous, however, is that SBOs plan to enjoy life when they retire.
By Douglas Dubitsky is the vice president of product management & development for retirement solutions for Guardian Life. To view the full 2014 Guardian Small Business Owners Retirement Readiness Study, please click here.
