While small business owners over the age of 50 are significantly less likely than employees to have pension or retirement plans, including 401(k)s, on their current job, they do tend to gravitate more towards IRAs and Keoghs.
That's one of the findings from a new SBA study, Retirement, Recessions, and Older Small Business Owners, which examined the retirement savings decisions of small business owners nearing retirement age, with particular emphasis on the role of economic downturns.
While some may not have certain retirement plans, the research showed that small business owners tend to have significantly greater individual retirement accounts and Keogh plan savings than employees.
Recommended For You
Older small business owners invest their retirement savings similarly to older employees, the study noted, adding they do not seem to be more likely to choose equities over bonds.
The small business owner has a significantly later expected retirement age than an employee, according to the research. In fact, the small business owner may be less likely to retire altogether.
Specifically, small business owners in 2010 reported that they would retire on average at age 72.6, while the expected retirement age among employees was 68.4.
When it comes to financial knowledge, small business owners over age 50 knew more about concepts such as inflation, interest calculations, and general financial literacy than employees.
Based on the findings, the SBA said the research provides support for small business assistance programs as a way for individuals to gain valuable financial skills. It is also possible that facilitating small business ownership could lead to greater retirement preparation and greater retirement income security, the agency noted.
To collect the data the researchers used the Health and Retirement Study from 1992 to 2010 for the analysis. The study's data is collected every two years and include new cohorts every six years.
The HRS is a longitudinal nationally representative dataset of the U.S. population of individuals over age 50 that includes data on labor force status and history, income, assets, pension plans, and other health and psychosocial measures.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
