Nearly Half of Small-Business Owners May Never Retire

PRINCETON, NJ -- Nearly half, 47%, of small-business owners now plan to never retire until forced to do so for health reasons -- up from about 4 in 10 in 2005 and 2007 -- according to a recent Wells Fargo/Gallup Small Business Index poll. Another 41% plan to cut back on work but stay involved with their business when they retire. Those planning to stop working in their business altogether fell to 1 in 10 during 2010 from nearly twice that level in 2005.

More Will Retire Later

When asked about a target retirement age, 69% intend to retire at age 65 or older -- up significantly from 41% in 2005 and 52% in 2007. At the same time, 21% of owners plan to retire between the ages of 60 and 64, while 11% intend to do so prior to age 60 -- both percentages representing significant declines from 2007.

Fewer Will Retire Comfortably

Nearly 8 in 10 small-business owners prior to the recession in 2007 thought they would have enough money to live comfortably when they retire. By 2010, fewer than two in three felt that way.

At least in part, this may be the result of the damage the recession and financial crisis have done to the assets small-business owners plan to rely on as a major source of income for their retirement. When asked to rate each of a list of 11 different sources of retirement income, small-business owners are most likely to say: a 401(k) or similar account, the value of their business, the equity in their home, and individual stock and stock mutual funds, followed by Social Security.

Sixty-two percent of small-business owners look to Social Security as a minor source of retirement, followed by 56% pointing to part-time work and 52% relying on regular savings accounts or CDs.

Economic Crisis Cost Savings That May Never Be Rebuilt

More than 6 in 10 small-business owners say they have made "major" or "minor" changes to their retirement strategy as a result of the economic downturn. While 58% say they are looking forward to retirement a "great deal" or "somewhat," one in four say they are not looking forward to it at all. Nearly two in three think of retirement as a time when they can work at something they enjoy and do so on their own terms. The other third see retirement as a time to rest, relax, and enjoy life.

Regardless of how they view retirement, small-business owners do have retirement worries that the recession and financial crisis of the past several years have exacerbated. For example, 58% say they worry they won't be able to maintain the standard of living they now enjoy when they retire, compared with 36% saying this in late 2007, prior to the start of the recession. Still, their most prevalent worry about retirement is a new one that many Americans likely share -- 68% worry that they will not be able to build back retirement savings lost during the recent economic downturn.

The economic crisis of the past three years has done great economic damage as many Americans have lost their jobs, seen their incomes decline, lost their homes, and lost their businesses. Though not often discussed, many Americans not experiencing such disastrous events have also suffered as they've seen years of savings disappear that they may never be able to rebuild.

Still, small-business owners do have one major advantage: most love what they do. As a result, many may never retire. When asked if money were no object, which of four things they would do today:

• 51% say they would continue working full- or part-time in their current business;
• 28% say they would retire completely;
• 18% say they would start another business; and
• 2% say they would work for someone else.