Even though some are doing what they love, small business owners are the latest group to express concerns on whether they will ever be able to retire.
Their biggest fear is outliving the money they need to retire, a concern expressed by nearly two-thirds of small business owners, according to a new study from the Guardian Life Small Business Research Institute. Conducted in the December 2010, the survey polled 1,433 small business owners.
The findings revealed that many expect to live well into their retirement years, with one in three saying they plan to retire older than 70. Less than half (45%) felt very or fairly well prepared for retirement. Fourteen percent plan to work part-time in retirement while 10% expect to work full time. Nine percent said they will fully retire and never work for pay.
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"For many small business owners, the conventional concept of retirement is not realistic," said Mark Wolf, director of the Guardian 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."
Thirty-nine of respondents said they expect to go back and forth between periods of work and periods of leisure. Six percent are planning to engage in volunteer work and 4% intend to start a new business. Three percent of small business owners said they want to do something else but did not indicate their plans.
Compromising retirement planning is the fact that only one-third of small business owners have a succession plan in place, and only 19% said they plan to create one in the next year, according to the study.
Small business owners are hoping that a range of financial sources will support them in retirement, including their savings, investments, individual retirement accounts, Social Security and real estate holdings, said Douglas Dubitsky, vice president, product management, retirement solutions division of Guardian Life Insurance Company of America. 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," Dubitsky said.
"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 Greene, special academic adviser to the Guardian Institute. "In many cases, small business owners keep working because they love what they are doing and don't see the point of retiring."
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