Retirement
• Sixty-eight (68) percent of small-business owners have given at least “quite a bit” of thought to retirement, financial planning for retirement, and their relationship to the business at retirement. Just 5 percent have devoted no real thought to these matters. An important reason for the extent of consideration given to them is that the median age of owners is over 50 years.
• Half of small employers plan to dispose of their current businesses through sale or closure at or prior to retirement. Twenty-nine (29) percent expect to pass their businesses on at retirement and another 22 percent expect neither to sell nor to relinquish their operations.
• Forty-six (46) percent of small employers intend to never fully retire. Another 23 percent will retire at 65 or older with half that number retiring at 70 or older. Sixty (60) percent of those intending full retirement at some point expect to phase-out, rather than to retire abruptly. The median age for starting to phase-out is 61 years.
• Thirty (30) percent of small employers sponsor a pension plan, a 401(k) being the most common type. Ninety (90) percent of owners participate in their firm’s pension plan. Plans where they exist are typically instituted about five years after the business started operations (or changed ownership).
• There is often a trade-off between the provision of employee pension and health insurance benefits. Twenty-one (21) percent more small businesses offer the health benefit than the retirement benefit. Of those that provide both, the health benefit was instituted first by an 8 - 1 margin (10 percent instituted both at the same time). Of those that provide neither, the health benefit would come first – if the employer were to provide either – by a 5 - 1 margin.
• Small-business owners plan to rely on a median of four sources for their retirement income. The most common sources are savings and investments unrelated to the current business and Social Security retirement benefits. Ninety-one (91) percent expect to use the former as retirement income and 88 percent the latter. The next most frequent expected source of retirement income is sale of the business or its operating profit (80%).
• The most important sources of retirement income in terms of amount received will be savings and investments unrelated to the business and sale of the business or its operating profit. Most expect to receive little from Social Security and employment or a job unrelated to the current business.
• Of the retirement income sources assessed, a pension unrelated to the current business, a pension earned as part of the current business, and an inheritance or bequest ranked at the bottom, both in terms of expected frequency of use and share of retirement income generated.
• Seventy-nine (79) percent of small employers are at least somewhat confident that they will have adequate income to live comfortably in their retirement years. Just 6 percent are not at all confident. This assessment may be optimistic. While a 61 percent majority say their retirement financing activities are on, or ahead of, schedule, 38 percent say they are behind.
