Almost two thirds (61%) of owner-managers are relying on their business to provide at least half of their retirement funds, according to research from accountants and business advisers MacIntyre Hudson.

Furthermore, nearly 1 in 5 (18%) of business owners will rely entirely on their business to finance their retirement. However, despite this heavy financial dependence on their enterprise, the survey also revealed that 77% of owner managers have yet to make a detailed exit plan.

The research highlights that the majority (57%) of business owners aged 50 and over will be depending on their business for at least half of their pension pot. However, even this more mature age group seems to be unprepared for retirement since 1 in 3 owner mangers over the age of 50 refuse to consider an exit plan and 71% have yet to make a detailed plan of what they want to do.

Ken Linge, a partner at MacIntyre Hudson, commented on the findings: “Most owner managers devote all their time and energy to developing and maintaining their business, but it is important that they regularly stand back and evaluate their personal requirements."

"Those looking to their business to fund their retirement need to consider that it takes on average over three years to prepare a business for sale or to put it in a position where their day to day involvement can be substantially reduced. A business primed for sale can be worth considerably more than one where the owner has neglected to plan ahead. With this in mind, owner managers should take action now to formulate or review their plans for their own future.”

The research also found that 1 in 5 business owners think that they will have to delay their retirement following the recent period of prolonged economic downturn, falling annuity rates, and declining investments. The fear or realisation that they will have to work longer was greatest amongst the younger age group with 43% of those under 30 believing that they will have to delay their retirement compared with 26% of business owners aged 50 or over.
Ken Linge continued: “While it has always been challenging to build up a successful business which enables you to retire comfortably in your 50s, nowadays it is even more difficult to achieve this goal."

"Although, it is not unreasonable for owner managers to look to their business to provide the capital they will need to finance their retirement, it is important that they make additional provision for later life. The adage of not putting all your eggs in one basket applies just as much to retirement plans as any investment decision.”