Retirement

1. 1

   Sixty-eight (68) percent of small-business owners have given at least “quite a bit” of thought to retirement, financial planning for retirement, and their relationship to the business at retirement. Just 5 percent have devoted no real thought to these matters. An important reason for the extent of consideration given to them is that the median age of owners is over 50 years.

2. 2

   Half of small employers plan to dispose of their current businesses through sale or closure at or prior to retirement. Twenty-nine (29) percent expect to pass their businesses on at retirement and another 22 percent expect neither to sell nor to relinquish their operations.

3. 3

   Forty-six (46) percent of small employers intend to never fully retire. Another 23 percent will retire at 65 or older with half that number retiring at 70 or older. Sixty (60) percent of those intending full retirement at some point expect to phase-out, rather than to retire abruptly. The median age for starting to phase-out is 61 years.

4. 4

   Thirty (30) percent of small employers sponsor a pension plan, a 401(k) being the most common type. Ninety (90) percent of owners participate in their firm’s pension plan. Plans where they exist are typically instituted about five years after the business started operations (or changed ownership).

5. 5

   There is often a trade-off between the provision of employee pension and health insurance benefits. Twenty-one (21) percent more small businesses offer the health benefit than the retirement benefit. Of those that provide both, the health benefit was instituted first by an 8 - 1 margin (10 percent instituted both at the same time). Of those that provide neither, the health benefit would come first – if the employer were to provide either – by a 5 - 1 margin.

6. 6

   Small-business owners plan to rely on a median of four sources for their retirement income. The most common sources are savings and investments unrelated to the current business and Social Security retirement benefits. Ninety-one (91) percent expect to use the former as retirement income and 88 percent the latter. The next most frequent expected source of retirement income is sale of the business or its operating profit (80%).

7. 7

   The most important sources of retirement income in terms of amount received will be savings and investments unrelated to the business and sale of the business or its operating profit. Most expect to receive little from Social Security and employment or a job unrelated to the current business.

8. 8

   Of the retirement income sources assessed, a pension unrelated to the current business, a pension earned as part of the current business, and an inheritance or bequest ranked at the bottom, both in terms of expected frequency of use and share of retirement income generated.

9. 9

   Seventy-nine (79) percent of small employers are at least somewhat confident that they will have adequate income to live comfortably in their retirement years. Just 6 percent are not at all confident. This assessment may be optimistic. While a 61 percent majority say their retirement financing activities are on, or ahead of, schedule, 38 percent say they are behind.

Volume 5, Issue 3, 2005
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 4About how old do you intend to be before you FULLY retire, or don’t you ever intend to FULLY retire? Top 100
• 1How much thought have you given to retirement, financial planning for retirement, and your relationship to this business when you retire? Have you given it:?
• 2Do you think you will:?
• 2aIs closing or selling more likely?
• 3Do you expect that all, most, some, a little or none of your retirement income will eventually come from the sale of your business or its operating profit?
• 4aDo you intend to phase out before you fully retire?
• 4bAbout how old do you intend to be when you start phasing out?
• 5Has performance of the stock market over the last five years or so caused you to change the date of your retirement?
• 6Does your business sponsor a pension program for at least some of your employees?
• 6aWhat type of a pension plan is it? Is it a:?
• 6bHow long has this plan been in existence?
• 6cDo you personally participate in the plan?
• 6c1Do you expect that the retirement benefits you eventually receive from the plan will constitute all, most, some, or a little of your retirement income?
• 7Does your business sponsor a health insurance program for at least some of your employees?
• 8Which benefit did you institute first, health insurance or a pension plan?
• 9If you were to sponsor a health insurance plan or a pension plan, which would you introduce first?
• 10Do you expect Social Security retirement benefits will constitute all, most, some, a little, or none of your retirement income?
• 11Do you expect that all, most, some, a little, or none of your retirement income will come from a pension earned in an organization unrelated to this business, such as another firm, government, or military?
• 12Do you expect that all, most, some, a little, or none of your retirement income will come from savings and investments that are unrelated to a formal pension plan or the sale of this business?
• 13Do you expect that all, most, some, a little or none of your retirement income after retirement age will come from employment or a job unrelated to this business?
• 14Do you expect that all, most, some, a little or none of your retirement income will come from a bequest or inheritance?
• 15Do you expect that you will own at least a substantial share of this business some time in the future?
• 16How confident are you that you will have enough money to live comfortably in your retirement years? Are you:?
• 17How far ahead or behind schedule are you in saving for retirement? Are you:?