5 Things small business owners can do to prepare for retirement

Melissa Jenkins
(Australian Associated Press)

FIVE THINGS SMALL BUSINESS OWNERS CAN DO TO PREPARE FOR RETIREMENT

1. Start paying yourself superannuation each year and make regular top up concessional contributions if possible.

2. Consider investing in property or shares so you can access your money if you need it, rather it being locked away in super.

3. Regularly review your investments, and seek advice on whether self-managed super is the best option.

4. The calculator on The Association of Superannuation Funds of Australia website can give you a general idea about how much you will need to achieve the lifestyle you want in retirement.

5. Ensure you work ON your business rather than IN your business, so you can build your brand and client base for when it comes time to sell.

Planning for retirement is often back of mind for small business owners focused on keeping their ship afloat.

You’re not alone if you decide to plough excess money back into your business, especially in its infancy, and thinking you will get a retirement plan together one day soon.

The reality is, one day can roll around sooner than you think.


A recent survey of the owners of around 300 small and medium businesses found more than 40 per cent don’t have a plan to fund their retirement.

Less than half were confident they could afford the lifestyle they want in retirement, according to the research conducted last September by Empirica Research for accounting firm Bentleys.

Financial planner Steve Greatrex, from Wealth On Track, says failing to put money into superannuation is the biggest mistake small business owners make, particularly when getting their venture off the ground.

“In many cases they just don’t think of it and if they do they just don’t have the money,” he says.

“It becomes like a bad habit, it’s like you stop going to the gym and then you never go back again.”

Mr Greatrex says it’s a good idea for business owners to pay themselves 9.5 per cent superannuation, just as they are obliged to by law for any employees.

Like regular workers, small business owners can also make regular top up concessional superannuation contributions.

Concessional superannuation contributions are capped at $30,000 for under-50s, which will be cut to $25,000 from July 1, 2017. The cap is a little higher for over 50s at $35,000 but this will also be slashed to $25,000. The maximum tax rate on superannuation is 15 per cent.

Complete Commerce director Brett Wood says he often recommends small business owners invest in assets in their own name, like shares or investment property, rather than tying up that cash in superannuation when they are starting out.

He says it’s important to regularly check in on your investments as your own personal and broader economic circumstances change to ensure you are on track to reach your goals.

“People tend to get a plan, be happy with a plan and then forget to monitor it as they go,” Mr Wood says.

He says small business owners need to build systems and have people in place so they can eventually work on, rather than in, their business.

“If you actually step back from it while they do the core work and you are just sourcing business … then that gives you a chance to sell,” Mr Wood says.

“It doesn’t always work but that’s is always the plan.”

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