They’re getting better at helping employees save for retirement, and good at accumulating wealth in general, but as their own retirement draws closer, business owners surprisingly lack confidence in what the future holds.
According to TD Wealth’s Business Owner Retirement Readiness survey of over 1,000 high net worth individuals who own a business, 95% of those surveyed are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement.
However, as business owners actually approach retirement age, confidence dwindles.
Millennial business owners reported the highest confidence in their post-retirement income, with 78% very confident that their long-term investment plans will lead to the achievement of their goals, followed by Gen Xers at 69%.
Despite being the closest to retirement, of the age groups surveyed, only 59% of baby boomers are very confident that their long-term plans will allow them to achieve their goals.
“High net worth business owners face a myriad of challenges when it comes to their financial security in retirement,” Ken Thompson, Head of Trust & Investments for TD Wealth, said in a statement. “A financial plan is not only crucial to having confidence in retirement, but also to confidence in a business owner’s exit strategy, succession and estate planning, and other priorities that are vital to achieving financial goals.”
Advisors boost confidence
Seven out of ten business owners surveyed indicated that they work with a financial advisor.
Surprisingly, millennials were more likely to work with a financial advisor (77%) than baby boomers (64%).
Business owners who work with an advisor are also significantly more likely to be confident in their future income compared to those not working with an advisor.
Retirement ready or not
In addition to the confidence business owners currently have in their retirement plans, and the relationship between their confidence and whether they work with an advisor, the survey explored other influences determining their retirement readiness.
Factors included the desired age to stop working, what concerns could affect their goals, and where respondents’ income will be sourced from in later years.
The survey found that 66% of business owners expect to retire between the ages of 51 and 75.
One in eight respondents age 55 and older plan to never retire. Those planning to retire at age 50 or younger skew younger. Fifteen percent of those planning to retire younger than 50 are between the ages of 18 and 34, and seven percent are between the ages of 35 and 54.
Many business owners also have concerns around how external factors may impact their ability to achieve their financial goals, including economic uncertainty (50%) and market volatility (40%).
Not surprisingly, concerns around health insurance costs increase with age, from 25% among millennials to 34% among baby boomers.
When it comes to retirement income, 34% of high net worth business owners estimate their retirement income will come from retirement savings plan, investment portfolio (21%), Social Security (11%) and personal savings (10%), with the balance coming from other sources.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
