Research shows that most Canadians aren’t prepared for retirement, and a recent BMO report reveals business owners are no different. In fact, they’re considering increasing savings or selling their businesses to help reach their retirement goals.
Read: Changes to corporation taxation: what you need to know
The report’s highlights include:
- Many business owners (72%) have saved less than $100,000 for retirement.
- About one third haven’t considered which exit option to use to fund shortfalls in retirement savings.
- Withdrawing funds at a rate of $50,000 a year can cause a $500,000 pool of retirement savings to disappear in about 12 years.
- The amount needed for a sustainable retirement between the ages of 65 and 90 is approximately $1,100,000.
Read: Help investors move away from Canada Savings Bonds
“Retirement dates can vary for business owners depending on their personal and business circumstances,” says Chris Buttigieg, senior manager of wealth planning strategy at BMO Wealth Management, in a release. “By revealing the shortfalls in a business owner’s retirement fund based on how much they’re saving each year, a financial plan will help them prepare for every circumstance.”
ValidateIt Technologies conducted the survey for BMO between June 27 and July 1, polling 405 Canadian small business owners aged 25 to 64.
When it comes to exit options to fund retirement, more than one third of those surveyed said they would sell to buyers outside the family (36%).
Other exit options include transferring the business at no cost to family (15%), closing or winding down the business (12%), or selling the business to family (4%). Read the full report here.
Also read: Are client portfolios ready for P2P lending?