Small Business Owners over 50: Do You Have a Retirement Plan in Place?

As a small business owner over the age of 50, do the words, “I don’t plan to retire” or “my retirement fund is my business” sound familiar? Surprisingly, this is a very common response given by many small business owners in Australia, both under and over the age of 50. The fact of the matter is, many small business owners may end up pulling the pin at some point or forced to do so due to health concerns and even changes in industry trends instead of retiring when they are ready.

It is quite evident that saving for retirement is and has been a constant struggle for many small business owners in Australia with all of the ongoing overhead costs, including costs of funding and expanding their business, as well as paying themselves enough to make sure their family has food on the table and a roof over their heads. Financial challenges such as these have often been the reason for many business owners not having any retirement plan in place at all, not even at the age of 50.

How Much Money Does a Person Need to Retire at Age 60?

When all expenses are accounted for in a small business owner’s financial plan, there often isn’t enough left over to build long-term wealth. Many of our young small business owners today struggle with this as well. However, no matter a person’s age and how long they have been in business, a retirement plan can still be put into place.

The amount a person puts away all depends on what they feel they can comfortably afford, what kind of lifestyle they plan to live, and when they begin saving. It is possible, that what many people feel they need to retire well is an overwhelmingly high number that may feel unattainable for them. Financial experts advise that it is best to just get started with what you can and somehow work that into your business plan and monthly expenses.

When it comes down to it, no one wants to be forced into retirement without having anything saved as that could have a large impact on how you live and on your stress levels. According to ASFA & Westpac, the amount a person has to live on at retirement varies.  They conducted a study by asking people who are already retired about their living expenses and how well they live both as a couple and as single person.

For example, if you’re a single person, in order to live modestly during your retirement years, you need approximately $24,000 per year or around $455 per week. For a single person to live comfortably, they need about $43,000 per year or $824 per week. For couples, a modest lifestyle would be approximately $34,000 per year or $654 per week. To live comfortably as a couple, you would need roughly around $59,000 per year or $1130 per week.

Source: ASFA Retirement Standard

The above numbers were published based on the results of the study in March 2017. The numbers should give you a rough idea on what to aim for when it comes to retirement planning. However, it is also important to remember that these numbers are based on the living expenses and standards of today, and will most likely change over time, which makes it even more necessary to start working on a retirement plan as soon as possible.

Business Owners Are 100% Responsible for Their Retirement Savings


As a business owner, you are most likely aware that when it comes to your savings, you are entirely on your own. Unlike employees working for a company, you have no one paying your superannuation for you. So the sooner you get started the better it will be for you in the long run, even if the thought of paying yourself is a painful one.

If you are a small business owner in your 50s, you still have time to put a plan in place for age 60 to 65. Part of your plan could also include the sale of your business to help give your retirement that extra boost. Whatever the plan might be built around, it is important to sit down with your financial planner on the Sunshine Coast or find one in your local area so you can put your retirement plan together. They can take a look at your business, your income and profits, your monthly business and personal expenses, what your business is worth and what it could be worth in the future, and come up with the right plan to suit your needs and projected retirement age.

Consider Saving with a Self-Managed Superannuation Fund

Due to the many beneficial tax benefits as well as other benefits of a self-managed superannuation fund (SMSF), this is often the retirement fund of choice for many business owners. Superannuation rules are always changing, so make sure you ask your advisor or planner about what kind of additional tax breaks, asset control, and investment options and strategies that may be available to you at this time.

Another reason you may want to consider super is that as long as you are making regular contributions to your fund, your funds are protected from bankruptcy should your business fail. The key here is to make sure that regular contributions are being made and that those contributions do not appear to be a way for you to hide from bankruptcy. It is really just another benefit of putting money in super as a small business owner, as there are many. Again, it is recommended that you check with your financial planner or advisor on how to use the fund correctly as well as how to get a complete understanding of how the fund works.

Conclusion

If you happen to be a small business owner over 50 and still haven’t worked on a retirement plan, but would like to retire by let’s say the age of 65, then you still have some time to put together a plan and to get to work. Chances are, your kids are all grown up and are completely independent, and other major expenses have been taken care of or have decreased, so now could be the best time for you to make your retirement dreams a reality.