While most business owners say they’re on track for retirement, recent findings from Nationwide show that just over a third (36%) have postponed their retirement in the past year.
Multiple studies have spotlighted the retirement needs of employees, but Nationwide’s latest survey of 800 U.S. business owners highlights the challenges employers face for the long-term.
This strain on savings is even more prominent among small business owners, the firm reports. Within the last 12 months, Nationwide found that 57% of small business owners have pushed back their retirement timelines because they’re worried about money in their later years. Forty percent of small employers say they have had to reduce the amount they save due to the economic environment.
Others believe they have a long way to go until they reach retirement, as 19% believe they are on the “wrong track” while another 19% say they aren’t even thinking about retirement right now.
Overall, respondents listed several financial reasons on why they’ve delayed their post-carrier future, either due to worries about income, lifestyle, economic conditions, and even future health-related expenses.
The findings aren’t all doom and gloom, however – 40% of all respondents to the Nationwide survey delayed retirement because they simply enjoy working.
Plus, others are focused on revamping their own workplace benefit plans to appease and recruit workers. Juan José Pérez, president of Nationwide Corporate Solutions, notes that more business owners now view talent acquisition and enhancing employee benefits as key opportunities in the year ahead, as 53% say they have or are planning to improve retirement plan offerings within the next six months.
Still, Nationwide urges business owners to consider their own retirement needs alongside their employees, adding that financial advisors could help with personal retirement planning, too.
“It’s good to see business owners are taking important steps to attract and retain talent, however some may be missing an opportunity to focus on their own retirement security,” Pérez tells 401(k) Specialist. “Older business owners indicated access to retirement savings plans, consultation services with financial advisors and financial education would be most helpful in supporting their personal retirement preparedness. This highlights an opportunity for advisors to make sure their business owner clients are considering both the needs of the business and their personal retirement plan in discussions.”
This support could also extend to succession planning, which more than one-third of respondents say they don’t currently have. Among those small business owners without a succession plan, 24% plan on closing their business permanently when they retire.
Bracing for multiple scenarios
Alongside their own retirement and succession plans, business owners are preparing for potential disruptions and improvements to their businesses, whether that includes economic challenges, cybersecurity resiliency, benefit needs, or even structural repairs to their property.
Nationwide found that businesses are proactively planning for potential crises (53% small and 66% mid-market), implementing or updating their business continuity plan (41% small and 63% mid-market), and making structural repairs or improvements to their building/property (31% small and 59% mid-market).
Furthermore, Nationwide reports that business owners are investing in their workforce by providing additional benefits, such as increased compensation and improved retirement offerings. More than half (59%) of small and 80% of mid-market business owners are planning to or have already increased wages. About one third (32%) of small and 74% of mid-market business owners are planning to or have already improved retirement offerings.
Nationwide point to the Coronavirus pandemic for strengthening employer responses to the unexpected, as 73% of older business owners say they are at least moderately or extremely prepared to navigate the next major disruption to their business. Pérez adds that advisors could further bolster plan sponsor relationships by helping employers prepare their businesses for the unforeseen.
“Advisors can add value to the relationship by helping their business owner clients think about their broader risk management strategy, whether that’s planning for accessing emergency capital, protecting their investments or bringing new risk management partners to the table – including insurance agents, cyber security experts, attorneys, employee benefits consultants or others who may be able to help business owners prepare for whatever the next challenge may be,” he stated.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
