Most small business owners’ views about retirement are radically shifting, with many expecting to continue working to age 70 — or never retire at all. This is according to a new study by The Guardian Life Small Business Research Institute.
The Institute’s survey, fielded in December 2010, polled 1,433 small business owners who operate companies with two to 99 employees. Findings revealed that many expect to live well into their retirement years, with one in three saying they plan to retire older than 70. Their biggest fear is outliving the money they need to retire, a concern expressed by nearly two-thirds of small business owners.
As a result of longer life expectancies and the impact of the recession, the majority of small business owners can no longer embrace a traditional view of retirement, in which individuals stop working in their mid-60s for a life of leisure – something fewer than 10 percent foresee themselves doing. The Institute’s study revealed the following:
- Less than half – 45 percent – feel very or fairly well prepared for retirement.
- 39 percent expect go back and forth between periods of work and periods of leisure
- 14 percent plan to work part-time
- 14 percent think they will engage in volunteer work along with paid work
- 10 percent plan to work full-time
- 9 percent say they will fully retire and never work for pay
- 6 percent think they will engage in volunteer work without any paid work
- 4 percent intend to start a new business
- 3 percent – something else
“For many small business owners, the conventional concept of retirement is not realistic,” said Mark Wolf, Director, The Guardian Life Small Business Research Institute. “They feel that keeping their business going and working in it full- or part-time are essential steps to provide a continuing income stream to supplement savings and investments diminished by the recession.”
Other motivations may also help explain small business owners’ views about retirement. “Retirement may not mean the same thing to individuals who own a company versus those who work for someone else and have done that their whole lives,” said Patricia G. Greene, Ph.D., MBA, Special Academic Advisor to The Guardian Life Small Business Research Institute and the F.W. Olin Distinguished Chair in Entrepreneurship at BabsonCollege. “In many cases, small business owners keep working because they love what they are doing and don’t see the point of retiring.”
Compromising retirement planning is the fact that only one-third of small business owners have a succession plan in place, and only 19 percent say they plan to create one in the next year.
“Small business owners are hoping that a range of financial sources will support them in retirement – their savings, investments, IRAs, Social Security and real estate holdings,” said Douglas Dubitsky, Vice President, Product Management, Retirement Solutions Division of Guardian Life Insurance Company of America. “However, nearly one-third are counting on the proceeds from the sale of their business. Depending on market conditions, the value and salability of many businesses have significantly declined, reducing their potential contribution to a retirement plan.”
Detailed findings from the research are available here.
About The Guardian Life Small Business Research Institute
The Guardian Life Small Business Research Institute is a resource devoted to better understanding America’s small business owners. It combines research the company commissions with the expertise of people within the Guardian Life family who have deep experience in the small business community, to yield deeper knowledge, insights and wisdom about today’s small business trends.
For more information about The Guardian Life Small Business Research Institute, please visit: www.smallbizdom.com.
About Guardian
A mutual insurer founded in 1860, The Guardian Life Insurance Company of America and its subsidiaries are committed to protecting individuals, business owners and their employees with life, long term care insurance, disability income, dental insurance products, and offer 401(k), annuities and other financial products. Guardian operates one of the largest dental networks in the United States, and protects more than six million employees and their families at 120,000 companies. The company has approximately 5,000 employees in the United States and a network of over 3,000 financial representatives in more than 80 agencies nationwide.