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Can Small Business Owners Ever Retire?

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The question I asked in the title of this post might seem premature if you haven’t started a business yet. But it’s never too early to plan for retirement, even though a recent survey from Guardian life insurance reveals that few small business owners seem to be doing so.

Small Business Owners Perspectives on Retirement found that one in three small business owners expect to wait until after age 70 to retire. An even larger number (four in 10) say they will never retire! Altogether, less than 10 percent expect to do the traditional “retirement” thing and stop working in their mid-60s.

These numbers didn’t really surprise me, because if there’s one thing I know about entrepreneurs, it’s that their businesses are their passion. I can’t imagine what I’d do if I retired, and I’m sure many of you feel the same.

What did surprise me about the survey’s findings was how many small business owners were writing off retirement for reasons other than love of their businesses. Just 45 percent of respondents said they feel very or fairly well prepared for retirement. Almost two-thirds are afraid they’ll outlive their savings.

These are scary figures. If you’re going to keep working because you love it, that’s great—but if you’re doing it because the alternative is poverty, that’s not so wonderful. In reporting the findings, Mark D. Wolf, Director of the Guardian Life Small Business Research Institute, says many entrepreneurs plan to keep working in their businesses full- or part-time after traditional retirement age to make up for the recession’s effects on their incomes and assets.

Failing to adequately save for retirement has long been a common error among small business owners. Unfortunately, the recession has exacerbated it. Whether you’re in the startup stage or in rapid expansion, it’s all too tempting to tell yourself that the money you’re putting back into the business is building your future.

That’s true to some extent, but it’s not the whole truth. Even if your company becomes highly successful, relying on it as your retirement fund is risky business. Even the most successful business may not survive until its founder is ready to retire. And if it does, it may not get the desired asking price. To put it in terms your grandmother would understand, by putting all your money into your business, you’re putting all your eggs in one basket.

That might be OK when you’re 22, but at some point, you do need to start putting money aside for retirement. That way, even if you want to work until you’re 95, you’ll be doing it because you want to—not because you have no choice.

Rieva LesonskyCEO, GrowBiz Media
Rieva is CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship. She was formerly Editorial Director of Entrepreneur Magazine and has written several books about small business and entrepreneurship. | @rieva | More from Rieva

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Discussion (4) Comment

  1. Dr. GVisitor

    I have owned my small practice for about ten years now. Saving for retirement was not something I even considered until about two years ago. I found a great firm to set up and handle our Plan. Steidle Pension Solutions seems to understand exactly what small businesses need (and don’t) regarding saving for retirement. It’s really nice to be able to call there any time and get my many questions answered in clear terms that I can understand.

  2. I have been a small business owner for 13 years now. For the first 9 years I was in abundance of income and time to enjoy it. When the economy turned around a few years back I ended up going backwards so far that I would have been better off just having a stable career. Small business owners really are at the mercy of economic conditions. My friends who have had steady jobs are still further ahead. . I am lucky I own two companies and the second one a marketing and web design company is really what saved me this past few years.

  3. RievaVisitor

    Thanks for your comment. It is so much easier to work hard, when you love what you do.

  4. White MediaVisitor

    Thanks for the great post. I find it odd that people weren’t writing off small business for retirement, based on love of their business as well. I, personally, feel that business owners are most successful when they truly love their business. My small business, a website design ny based company, is very fortunate to be where it is today. Thanks for the interesting article.


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