Are You Saving Enough for Retirement?

For many small business owners, the answer is no.

By Alan Wolf, YSN

As most financial advisors will tell you, Americans are doing a fairly poor job of saving enough for a comfortable retirement. And according to a new report by CNBC, small business owners are chief among those who are dropping the ball.

It’s not for lack of concern. But as investment professionals and retirement experts point out, entrepreneurs tend to prioritize their businesses over any tax-deferred retirement plans when they come into any excess cash. Like so many other things, this was only compounded by the pandemic, which forced many small businesses to cut back on or even stop funding their retirement plans to cover the higher costs of merchandise and labor.

Indeed, many smaller Main Street companies have fallen behind in their retirement savings goals in recent years, if they even started an investment plan, CNBC reported. This was confirmed in a March survey of 500 small businesses by ShareBuilder 401k, in which 37% of respondents said they doubt that they are putting aside enough for retirement, while 24% of those polled said they are not currently contributing to a retirement plan at all.

The good news, according to the financial professionals interviewed, is that the stock market’s recent tumbles are an excellent opportunity to help make up for lost time. The experts’ advice:

  1. Put at least 10% of income into savings, if possible, in order to maintain the same standard of living in retirement. —Stuart Robertson, CEO, ShareBuilder 401k
  2. Cut expenses where possible and divert the savings into your retirement plan. —David Peters, founder/owner, Peters Tax Preparation & Consulting, Richmond, Va.
  3. Take on more investment risk for a higher rate of return down the road. —Timothy Speiss, Personal Wealth Advisors Group, EisnerAmper LLP, N.Y.
  4. Create a long-term savings plan and contribute to it regularly, in order to reap the rewards of dollar-cost averaging. —Kevin Busque, CEO/co-founder, Guideline

Hat tip to CNBC.