Small business owners across the country are typically very invested in making their companies work, and often make personal financial sacrifices in order to help their companies succeed. But experts say this willingness might actually be detrimental to them in some ways, because it can seriously impact their abilities to save for retirement.
Plenty of data these days suggests that baby boomer small business owners – those who are 55 or older – make up a significant portion of the existing entrepreneurs nationwide, and that as much as half of all new companies are being started by people in this age group, according to a report from USA Today. In all, more than 5 million people fall into this category, and that number is growing. But part of the reason for this seems to be that many of these people are pulling out of the traditional workforce and starting their own firms as a means of keeping some money coming in and staying active in their industries.
Why is this the case?
However, a big part of the reason for their even needing to feel like they have to keep working is that many in this generation have little to no retirement savings, the report said. There are many reasons why this might be the case, not the least of which is the recent economic downturn that saw millions of Americans dip into their savings just to stay afloat. But there might be a simpler answer as well: They really don’t plan on stopping working for quite a while, and have been focused on other issues related to their companies.
“The short answer for why most don’t save – they are running their business,” Neil Smith, executive vice president of Ascensus in Dresher, Pennsylvania, told the newspaper. “They are busy driving revenue growth, watching the bottom line, dealing with employees. They make the conclusion that the business will be their retirement fund. In many businesses, it can be a difficult transaction to get the liquidity out of the business.”
Owners who are concerned about this issue might want to think about the ways in which they can streamline their companies’ bottom lines. That might include finding more affordable small business insurance policies, including those for errors and omissions insurance, to potentially free up thousands of dollars annually.