More Than Half of Small-Business Owners Don't Want to Retire

PRINCETON, N.J. -- Retirement is not necessarily a desired career outcome for many U.S. small-business owners. The Wells Fargo/Gallup Small Business Index finds that if money were no object, over one-half (53%) of the nation's small-business owners would continue working in a full- or a part-time capacity. Only about one in four say they would retire completely. These sentiments are essentially unchanged from surveys conducted in 2014 and 2010.

	Continue working in current business^	Start another new business	Work for someone else	Retire completely	Don't know/Refused
	%	%	%	%	%
Quarter 1, 2017	53	17	2	27	1
Quarter 1, 2014	55	13	4	26	2
Quarter 3, 2010	51	18	2	28	1
^ Question wording: Continue working full or part time in your current business
Wells Fargo/Gallup Small Business Index Survey

These and other results from the latest Wells Fargo/Gallup Small Business Index survey, conducted Feb. 6-10, provide insights into U.S. small-business owners' views on a number of issues relating to their economic future.

If they do decide to retire, 76% of small-business owners feel they will have enough money to live comfortably in retirement, up from 66% in the first quarter of 2014 and back to the level seen before the recession.

	Yes	No	Don't know/Refused
	%	%	%
Quarter 1, 2017	76	21	3
Quarter 1, 2014	66	30	4
Quarter 3, 2010	63	33	4
Quarter 4, 2007	79	16	5
Wells Fargo/Gallup Small Business Index Survey

The Wells Fargo/Gallup Small Business Index survey has asked owners about retirement finances four times over the past decade. In 2007, before the beginning of the recession, 79% said they would have enough money to live comfortably in retirement. In 2010 and 2014, that percentage dropped into the 60% range, but it has now essentially recovered to where it was 10 years ago.

These figures are substantially higher than what Gallup has measured over the years when asking the same question of all nonretired adults. In April 2016, 48% of nonretired U.S. adults said they would have enough money to live comfortably in retirement. At its highest point in the pre-recession years of 2002-2004, nonretired Americans' level of confidence in having a comfortable retirement reached 59%.

Owners Most Likely to Project Using 401(k)s, IRAs to Fund Retirement

When asked about sources of funds in retirement, 40% of small-business owners say retirement savings accounts such as 401(k)s and IRAs will be a major source of money -- more than mention any other source listed. Between 22% and 27% of owners say a number of other entities will be major sources of money in their retirement -- including Social Security, home equity, individual stock investments, rent or money from property or real estate, and regular savings accounts or CDs.

Further, 27% of owners say the sale of their business will be a major source of retirement money, while 23% give that designation to income from their business.

	Major source	Minor source	Not a source
	%	%	%
A 401(k), IRA, Keogh, or other retirement savings account	40	39	20
Social Security	27	60	12
The value of the sale of your business	27	38	33
The equity you have built in your home	27	42	30
Individual stock or stock mutual fund investments	24	44	30
Rent or money from property or real estate	23	35	41
Income from your business, even after your retirement	23	41	34
Other savings such as a regular savings account or CDs	22	54	23
A work-sponsored pension plan	13	22	63
Annuities or insurance plans	11	42	45
Money from inheritance	9	30	60
Part-time work	6	51	42
Wells Fargo/Gallup Small Business Index Survey, Feb. 6-10, 2017

These projected sources of income mirror what Gallup has found from the general nonretired population. However, one exception is work-sponsored pension plans, which 26% of all nonretirees, but only 13% of small-business owners, cite as a major source of retirement money.

Most Owners Not Worried About Financial Issues in Retirement

Few small-business owners say they are "very worried" about a list of five financial problems that could affect them in retirement, perhaps reflecting that many don't plan on retiring at all. They are most worried about paying medical costs in retirement (21%). But fewer than one in seven small-business owners say they are very worried about the other concerns tested, including the basic issue of not having enough money to pay cost-of-living expenses in retirement. Only 5% are very worried about not being able to sell their business.

Notably, owners' worries about these issues have decreased for the three issues that were last measured in the first quarter of 2014. This most likely reflects owners' generally more positive sentiments about their business and the economic environment in which it operates.

	Very worried	Moderately worried	Not too worried	Not worried at all
	%	%	%	%
Not being able to pay medical costs of a serious illness or accident in retirement
2017 Quarter 1	21	25	26	27
2014 Quarter 1	31	26	22	19
2010 Quarter 3	35	29	19	16
2007 Quarter 4	23	24	24	27
Being able to build back retirement savings lost during the recent economic downturn
2017 Quarter 1	14	28	25	31
2014 Quarter 1	23	27	24	21
2010 Quarter 3	36	32	17	13
Not being financially prepared for an unexpected life event
2017 Quarter 1	14	31	28	27
Not being able to pay for basic cost-of-living expenses in retirement
2017 Quarter 1	10	22	32	36
Not being able to sell your business when you are ready to sell it
2017 Quarter 1	5	16	26	48
2014 Quarter 1	15	18	27	35
Wells Fargo/Gallup Small Business Index Survey

Bottom Line

Small-business owners have a more optimistic view of their retirement in 2017 than they did three years ago. This reflects a substantial uptick in optimism shown in the overall Wells Fargo/Gallup Small Business Index, which in turn reflects improved overall economic confidence. Small-business owners tend to have a more positive outlook about retirement than U.S. adults overall. Many owners don't want to retire at all, but keep working in their business in some capacity as long as they are able. These attitudes reinforce a generally upbeat small business environment today.

For more information about retirement issues, see the Wells Fargo/Gallup Retirement and Investor Optimism Index.