Here’s a reality check for those business owners whose expectations and misconceptions about saving for retirement prevent them from starting and maintaining a retirement plan through their business.
The State of Business Owners’ Retirement Planning
Let’s start with the big picture. It’s no longer debatable that Americans aren’t saving enough for retirement and that those savings are not going to be adequate. Only approximately 50% of the work force is covered (and not necessarily participating) by an employer-sponsored pension plan which hasn’t change for almost 30 years.
Business owners are less likely to have a retirement plan than people who work for them according to the Small Business Administration. Why not? In many cases, their expectation and misconceptions get in the way.
According to a recent Guardian study, 35% of business owners are expecting to fund their retirement through the sale of their businesses; and only 17% have identified potential buyers. The reality is that they may not be sell their businesses when they want to, or if the price they can get is for the “value” (at least in their minds) of the business.
There’s no formal study on the misconceptions business owners have regarding starting retirement plans, but I’ve got plenty of anecdotal evidence. Here are some of the objections I hear from business owners with an appropriate response:
Actually there are several takeaways. Here’s what the experts say are their #1 Retirement Planning Tip for Startup Founders on the Levinson Law Office Blog.