Many small-business owners are counting on the sale of their businesses to fund their retirement. However, they don't necessarily have an exit strategy — which could complicate matters.
That's the word from the Small Business Owners Retirement Readiness Study, produced by the Guardian Insurance and Annuity Co. Inc., which found that 35 percent of small-business owners say that the sale of their business is the key to financial preparedness for retirement (compared with 30 percent in 2011).
Problem is, only 17 percent have identified potential buyers for those businesses.
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Despite that, small-business owners are an optimistic and risk-tolerant lot, saying in the study that they feel having their own business is the best way to create the wealth they want.
In fact, 35 percent said they started their businesses as a means of funding their retirement (in 2011, only 25 percent said so) and 39 percent said they believe they can retire earlier than planned thanks to their small business (in 2011, 31 percent said that).
Interestingly, many small-business owners also don't see the value in having a retirement financial plan, though they do see selling their businesses as the plan.
Douglas Dubitsky, VP of Guardian Retirement Solutions, said that "expectation comes with a great deal of risk."
Given that women in general lag financially behind men in salary, savings and retirement planning, it will probably come as no surprise that study found the same is true among women small-business owners.
While 56 percent of male small-business owners said they feel they're financially prepared for retirement, only 45 percent of female business owners felt that way.
And only 14 percent of women business owners said they were "very well prepared" for retirement, with 12 percent saying they were "not really prepared at all."
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