Are small business owners doomed in retirement hopes?

The entrepreneurial spirit may be hard to quash but when it comes to making plans for their own retirement, business owners are increasingly finding themselves in just as much retirement turbulence as their own employees.

New research from the Small Business Administration, reported by Bloomberg, notes that small business owners have tended to believe that the assets of their own businesses will form the basis of their retirement plans - and they've therefore done little else to formalize their retirement savings, in a 401(k) or similar retirement tool as they might provide to their workers.

But while that do-it-yourself sentiment was a largely successful strategy in the days before America's financial downturn, the SBA now recognizes that entrepreneurs are now significantly less likely to possess diversified retirement assets - as their plan participant employees may do, if they've been prudent in investing or taking advantage of IRA offerings.

That means, unfortunately, that if a business owner goes out of business, his or her built-in retirement savings also go with it, as well as their pre-retirement income. Instead, many are hoping that the equity built in their homes will now suffice as a source of income in their retirement years.

Those who work as advisors to small businesses say that the trend is a troubling one, as owners also tend to simply expect to work longer in their lives (retiring at an average age of 72, versus the more common 68 of regular salaried employees), creating even more chaos if they are unable to get significant resources out of the sale of their business.

As a result, the Home Depots of the country are now filled with countless retirement-age former general contractors who used their profits to invest in their businesses, rather than themselves, noted SBA senior economist Jules Lichtenstein, who wrote the study.

And despite the existence of programs designed especially to help entrepreneurs save a little for themselves, including SEP and SIMPLE plans, both have done very little to protect small business owners as they move into retirement.

The study found that business owners are, on the whole, more likely to have IRA holdings or Keogh accounts than their salaried workers.

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