SMEs not so super savvy when it comes to retirement savings

Small-business owners are notorious for being among the hardest workers. After putting in so many hours to build and maintain a business, it isn’t surprising that most SME owners are dreaming of a well-funded retirement as the reward for their hard work. Yet when it comes to saving for their retirement, the majority of SME owners have a strategy in place, but they don’t all have the knowledge they need to plan accordingly.

According to research from accounting and advisory firm Bentleys, almost half of SME owners polled didn’t feel comfortable planning for when they finish work, with only 57 per cent reporting having a “strategy” in place for their retirement. Less than half (48 per cent) are confident they will be able to afford the lifestyle they want in retirement.

The Voice of Australian Business Survey, a national survey of SMEs across all industries and regions, asked SMEs how they would fund their retirement; with respondents most commonly citing reliance on savings (38 per cent of those with a plan), income from rent or other investments (35 per cent), their age pension (28 per cent), downsizing their current house (21 per cent) or selling their business (20 per cent).

Jodi Lupton, Director at Bentleys Queensland, said, “SME owners pour so much time, energy and passion into running their business but unfortunately many don’t take stock and spend the equivalent amount of time planning for the future. It is one thing to create and run a business, it is another matter to ensure that business is working for you – and will continue to do so – well into the future. This requires specific planning – considering things like investments outside of the business and superannuation; thinking about succession planning and more.”

While some SME owners may feel in control of their retirement strategy, it appears they may not have all the information they need to plan correctly. When asked to consider the impact of proposed superannuation changes, few anticipated any extreme impact.

Lupton encouraged SME owners who are unsure of their retirement strategy to educate themselves about their superannuation and the proposed changes so they can make informed decisions when planning for later in life.

“It’s easy to put superannuation on the back-burner but it’s imperative that SME owners take the time now to ensure they have a robust plan for retirement in place. The changes to superannuation are significant and these could have a very real impact on your retirement fund. As we welcome a new year, it is the perfect time to put some plans in place and to call on a professional who can advise on the best strategy to get you to the retirement of your dreams.”

Conducted by Empirica Research in September 2016, key findings from the survey of 314 micro, small and medium businesses across all industries and regions showed:

  • 52 per cent are not confident in their ability to afford their desired lifestyle, compared to 48 per cent of respondents who are confident
  • 43 per cent of respondents reported not having a ‘strategy’ to fund their retirement, with 57 per cent of those stating that they do
  • When asked how they would fund their retirement, respondents most commonly cited reliance on savings (38 per cent of those with a plan), income from rent or other investments (35 per cent), their age pension (28 per cent), downsizing their current house (21 per cent) or selling their business (20 per cent).
  • Three quarters (75 per cent) of respondents do not have an SMSF in place
  • Almost a quarter (24 per cent) had a SMSF. Of those, that do (24 per cent) 34 per cent involve a financial adviser in running it, with 67 per cent running it themselves.

Inside Small Business

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