Small business owners are just as unprepared for retirement as the rest of us, it turns out. Maybe more so.
According to a new report from BMO Wealth Management, only a fraction of the nation's 28 million small business owners are prepared for retirement. BMO called the report "startling."
According to the survey:
75 percent of small business owners have saved less than $100,000 in retirement funds. In the upper age bracket (ages 45-64) the entrepreneurs were only slightly more prepared -- 68 percent have saved less than $100,000.
Only 8 percent had saved more than $500,000, which is still not considered enough for retirement for many people.
Jason Miller, national head of wealth planning at BMO Wealth Management, says they weren't surprised by the results.
"Unfortunately, the results bear out what we see in practice," he says. "I don't know that there were any surprises."
And why don't small business owners save?
"We have tremendous respect for small business owners," he says. "They drive our economic activity. But starting and running a small business ins challenging, especially through economic cycles. They become very focused on running their business, and lots of times that requires any profit made in the business to be re-invested to make it grow. Unfortunately, sometimes personal retirement planning is not done along side of that."
His tips to help small business owners better plan for retirement:
"To the extent possible, be mindful of the idea that along with building a successful business, they should have a focus on accumulating wealth outside of the business. And for those nearing an exit, they should be putting together a thoughtful succession and considering the post-sale effect. They should consider the personal implications for the remainder of their retirement.
"Preparation and pre-planing is key," he says. "It's easy for momentum to take over. Slow down, step aside and put together a plan for contingency and business succession."
Rodney A. Brooks writes about retirement and personal finance for The Washington Post. Rodney has had a long and distinguished career in financial journalism. He previously worked at USA Today from 1985 until his recent retirement.