Published on Feb 21, 2017

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Is your retirement fund growing?

MYOB survey found that a whopping third of small business owners surveyed are not putting enough money into their personal superannuation and may not have the funds to retire comfortably.

The survey also found that many small business owners are counting on selling their business to help fund retirement.

Does this sound like you?

Retirement is an expensive part of our lives at a point where we no longer have an income from work.

Small business owners are obviously aware of this with 44%of those surveyed stating that they believe they will need $1 million dollars for their retirement.

Despite this over 50% of small business owners under 50 years of age have no retirement plan.

A survey by the Association of Superannuation Funds of Australia actually found that almost 25% of self-employed don’t have any superannuation at all.

One of the issues behind the lack of personal superannuation is late payment of invoices, particularly from large corporations and government agencies.

“Being a small business owner means contending with multiple challenges to the financial health of your enterprise. SMEs are often forced to wait months for payment, resulting in cash flow problems. This lack of cash can then impact the owner’s ability to pay their own super, as well as other pressing payments such as wages and rent” said Tim Reed, CEO of MYOB.

This halt in small business cash-flow means that small business owners are servicing debts and pay wages and employee superannuation, yet sidelining their own superannuation.

Melissa Browne, accountant, financial advisor, entrepreneur and author of ‘Fabulous but Broke’ says, “We spend a lot of time trying to convince business owners to pay superannuation but it’s low on their priority, regardless of the tax deduction or they don’t trust the government not to change the rules again”.

“In my opinion, small business owners should be paying the same super for themselves that they would be receiving if they were out in the corporate world. At a minimum.”

Find the report from MYOB at MYOB: SMEs and Retirement.

What you can do:

Family Business Australia suggests that succession planning should be on every business owners list to plan for retirement.

Having a succession plan doesn’t mean assuming that your kids will take over the business.

It means having a formal documented plan which states how succession will happen, who will own assets and who will manage the business.

Your succession plan also needs to be known and accessible by key people, along with an up-to-date legal Will.

Ensure you have an up-to-date shareholders agreement.

Review your plan regularly.

You should speak to your legal advisor about the following:

  • the Family Provisions Act.
  • Family Trusts, which can make succession planning complicated

Go to FamBiz Succession Planning for more detail.