New research from The American College, the nation’s largest non-profit educational institution devoted to financial services, reveals that while the overwhelming majority of small business owners are concerned about retirement, a third of the women and a quarter of the men surveyed have not estimated how much they are going to need when they retire. This data suggests that millions of business owners are unprepared for retirement.
According to the U.S. Small Business Administration Office of Advocacy, in 2009 there were 27.5 million businesses in the United States. Small businesses represent 99.7 percent of all employer firms and employ about half of all private sector employees.
Additional findings from the research raise questions about the quality of retirement preparation being done by the majority of small business owners. For example, while 66 percent of the women and 70 percent of the men said they had developed an estimate of their retirement needs, only half of these individuals have done so with the assistance of a financial professional. A quarter of the survey participants used online calculators, which often have serious limitations in adequately projecting changes in inflation, taxes, medical expenses and income streams. The remainder arrived at an estimate by performing simple calculations themselves using pencil and paper.
Even more distressing is the fact that regardless of whether small business owners have calculated their retirement goals, most do not have a formal plan to achieve their financial objectives. Among the small business owners surveyed, 77 percent of the women and 74 percent of the men have no written plan for retirement.